October 8, 2005

Check mover's insurance well before leaving for new home

Make list of all items transported, before departing, not after

Check own coverage and take most valued possessions with you

It's moving day. Everything you own is packed into
a moving truck. The moving company is hired to store your belongings for
two weeks while the new house undergoes some renovations.

The trailer containing all your worldly possessions pulls away from your
house and you never see it, or your belongings, again.

You later discover that the moving company had put the trailer on a
public street in Mississauga and one night it simply disappeared.

It takes you three weeks to prepare a detailed 65-page list of contents
and articles of particular value. Included on the list are pieces of
art, wedding photographs, antique furniture, needlepoints, carvings,
records, CDs and books.

You sue the movers, who are no longer in business, and their insurers.
Your own insurance company kicks in some of the loss. Five court
hearings follow in the next six years, with another one scheduled for
the new year, and still you don't have any money from the movers or
their insurers.

The story may sound bizarre, but unfortunately, it's true.

The odyssey started out in February 1999 when Stuart and Gayle hired
Kennedy Moving Systems to manage their move from one Toronto residence
to another in the city.

A few days later, the Kennedy trailer disappeared with all their
possessions, valued at $750,000.

The couple sued Kennedy Moving Systems, which defended the action on the
basis that the couple had signed a standard contract limiting the
mover's liability to 60 cents a pound or a total of $7,000. In
December 2001, a trial court awarded judgment to Stuart and Gayle and
tossed out the 60-cent limit.

The mover appealed the order to the Court of Appeal in December 2002,
but the court upheld the trial decision. The following year Kennedy
unsuccessfully applied for leave to appeal to the Supreme Court of
Canada.

In September 2003, the parties agreed at a settlement conference that
the damages for the lost goods were $437,500 and the original trial
judge signed an order awarding the couple $503,000, including interest
to 2001, plus almost $111,000 in legal costs. By January of this year,
the movers owed more than $725,000.

But the purse strings were still knotted shut. Although Kennedy Moving
Systems was out of business, its insurers were on the hook for the
damages. Kennedy had an insurance policy with Lloyd's Underwriters and
an excess, or umbrella policy, with what is now Allianz Canada.

At this point the insurers started fighting with each other over who was
responsible for paying the claim. The Lloyd's policy had a $500,000
limit for transportation, but a $1-million limit for warehousing, and
the court had to decide which limit applied, and whether Allianz had to
contribute to the payment under its excess policy.

The matter was further complicated by the fact that the missing trailer
also contained the goods of another couple whose lawsuit against Kennedy
has not yet proceeded to trial.

The case went to court again in April of this year, but the parties were
now two couples and two insurance companies, represented by a total of
nine lawyers.

The court decision was published last month by the Law Society of Upper
Canada in Ontario Reports, a weekly journal of recent court cases.

Stuart and Gayle were awarded the full amount of their claim without any
deduction for the pending claim of the second couple. Lloyd's was
ordered to take the full brunt of payment on the basis of its
warehousing policy limit. It was also ordered to pay all the costs and
interest owing from 1999.

When I read the story of Stuart and Gayle, it initially appeared that
they had finally triumphed and would be receiving just compensation.
Then I heard from Thomas Donnelly of Toronto's Cassels Brock law firm,
which acted for Stuart and Gayle.

Donnelly advised that the case has been appealed and is scheduled to go
before the Ontario Court of Appeal for the second time next
February, six years after the date of the original move.

It boggles the mind that a couple who lose all their possessions in a
move from one house to another have to spend six years in litigation
with no resolution in sight and no money. I estimate that the combined
legal fees of all the parties to date exceed several hundred thousand
dollars.

Last week I attended a conference of the directors of the Law Society of
Upper Canada. A judge of the Ontario Superior Court was speaking to us
about public access to justice and commented that despite his generous
salary, he wouldn't be able to afford to fund a lengthy court case.

It's a sad commentary that litigation in this province is rapidly
becoming a sport for only the wealthiest in our society.

A number of lessons can be learned from the saga of Stuart and Gayle:

●During a house move, take your treasured personal photographs, computer
and mementoes yourself.

●Make a list of every item being moved before the move, not after.

●Take pictures of the household contents and carry them with you.

●Check your own insurance policy to see what the coverage is for your
possessions while in transit.

●Get references from your mover before you sign the contract.

●Ask to see the mover's insurance policy. If the claim is limited to 60
cents a pound, get excess insurance if it's available, or delete the
limitation.

●If your goods are going to be put in storage for any period of time,
make sure the moving contract is very specific about where and how the
goods will be stored, and how they will be protected from fire, theft
and other risks. Inspect the storage warehouse personally.

●If you are inclined to believe in a Supreme Being, it certainly wouldn't
hurt to ask for a little protection for your worldly goods until the
move is over.

--------------------------------------------------------------------------------Bob Aaron is a Toronto real estate lawyer. He can be reached by email
at bob@aaron.ca, phone 416-364-9366 or fax
416-364-3818. Visit the column archives at
http://www.aaron.ca.

Rui Fernandes and Ramon Andal for the respondent Allianz
Insurance Company of Canada

Bernard Gasee and Deborah Stewart, for the respondents Rene
Bertrand and Elaine Bertrand

)

HEARD: January 26 and March 1, 2005

STINSON J.

[1]Monday,
February 1, 1999 was moving day for Stuart Solway and Gayle Ackler. On that
day all of their belongings were loaded into a moving truck owned by Kennedy
Moving Systems. They never saw their belongings again. The truck and all their
possessions were stolen and never recovered. Thus began a six-year legal
odyssey in which Mr. Solway and Ms. Akler have attempted (so far
unsuccessfully) to recover compensation for their loss from Kennedy.

[2]Kennedy is
now out of business. It had two insurance policies, however: a primary policy
issued by Lloyd's of London and an excess coverage policy issued by what is
now Allianz Insurance Company of Canada. Both insurers agree that the
Solway-Ackler loss is covered; they disagree about how much each of them
should pay. That dispute has brought these parties before the court in this
application.

The facts

[3]In early
1999 the applicants, Stuart Solway and Gayle Akler, were planning to move
house. (For ease of reference I will refer to the applicants as the Solways.)
They had purchased a new dwelling and had also signed an agreement to sell
their old one. The deals were scheduled to close on the same day, February 1,
1999. Because they planned to do some renovations in the new house, they
arranged to stay at Mr. Solway's mother's house and to have their belongings
placed in storage for approximately two weeks.

[4]The Solways
hired Kennedy Moving Systems to move and to store their belongings,
temporarily. On the appointed day, Kennedy loaded the Solways' belongings onto
the trailer portion of a tractor-trailer moving truck. Subsequently, Kennedy
left the trailer parked on a public street, unattended. In addition to the
Solways' belongings, the trailer also contained property owned by the
respondents, Rene and Elaine Bertrand. On or about February 10, 1999, the
trailer owned by Kennedy containing the goods of the Solways and the Bertrands
was stolen. None of the goods was ever recovered.

[5]The goods
owned by the Solways had been given to Kennedy under a bill of lading. The
goods owned by the Bertrands had been given to Kennedy under a separate bill
of lading.

[6]The Solways
issued a statement of claim against Kennedy (the "Solway Action"). Kennedy's
primary insurer, Lloyd's, elected to defend Kennedy in the Solway Action. The
main issue in the Solway Action was the applicability of a limitation of
liability clause contained in the Solway-Kennedy bill of lading. The Solway
Action proceeded to trial before Himel J. in November and December 2001. In
reasons for judgment released December 19, 2001 (reported as Solway v.
Davis Moving & Storage Inc. (2001), 57 O.R. (3d) 205 (S.C.J.)),
Himel J. granted judgment in favour of the Solways against Kennedy, and
referred the quantification of damages to a master.

[7]Kennedy
appealed the decision of Himel J. to the Court of Appeal for Ontario. In a
decision released December 12, 2002 (reported at
2002 CanLII 21736 (ON C.A.), (2002), 62 O.R. (3d) 522 (C.A.)) that court
upheld Himel J.'s decision in favour of the Solways and awarded them costs of
$13,000 payable by Kennedy.

[8]Kennedy
sought leave to appeal to the Supreme Court of Canada. On May 29, 2003, that
court dismissed the leave application, with costs (see [2003] S.C.C.A. No. 57
(S.C.C.)).

[9]The quantum
of damages payable under Himel J.'s original judgment was agreed upon and
consented to in the amount of $437,500 for damages and $66,195.55 for
prejudgment interest. Accordingly, Himel J. issued a supplemental judgment
dated September 3, 2003 ordering Kennedy to pay the Solways the sum of
$503,695.55, inclusive of prejudgment interest. Himel J. also ordered Kennedy
to pay costs to the Solways in the fixed amount of $110,789.94. She also
ordered post-judgment interest on these amounts at the rate of 6 percent,
commencing December 19, 2001 (the date of her original decision on liability).
Finally, she ordered Kennedy to pay $2,500 plus post-judgment interest of 5
percent with respect to the costs of the damage quantification hearing.

[10]In 2004, the
Solways instructed the sheriff to execute a writ of seizure and sale against
Kennedy, in order to collect their judgment (the "Solway Judgment"). The
sheriff was unsuccessful. Having found that there were no exigible assets, the
sheriff issued a certificate of nulla bona.

[11]Taking into
account the awards of costs and the accrual of post-judgment interest, by the
time this application was argued (in January 2005) Kennedy's liability to the
Solways under the Solway Judgment exceeded $725,000. In addition, Kennedy
remains liable to pay the Solways the costs awarded against it by the Court of
Appeal and the Supreme Court of Canada.

[12]For their
part, the Bertrands also commenced an action (the "Bertrand Action") against
Kennedy with respect to the goods that they owned and which were stored in the
trailer at the time of the theft. That action has not yet proceeded to
discovery. In their action, the Bertrands are seeking damages of $450,000.

The insurance policies

[13]Kennedy was
insured under Policy No. 1245-P066 issued by Lloyd's (the "Lloyd's Policy").
Lloyd's admitted coverage under its policy to the extent of $500,000. It
brought an application, without notice, for permission to pay the $500,000
into court, pursuant to s. 141 of the Insurance Act. That order was
granted and on May 13, 2004 Lloyd's paid $500,000 into court to the credit of
the Solways and the Bertrands. Those funds remain in court and no amount has
been paid to either the Solways or the Bertrands under the Lloyd's Policy.

[14]Kennedy was
also insured under an excess commercial umbrella policy, No. 20085605 (the "Allianz
Policy") issued by the Canadian Surety Company, which has since amalgamated
with Allianz Insurance Company of Canada.

[15]There is a
dispute between Lloyd's and Allianz as to how much each is liable to pay to
satisfy the Solways' claims against Kennedy. In view of that dispute and the
(potentially) competing claim by the Bertrands against the same insurance
money, no amount has been paid to either the Solways or the Bertrands by
Kennedy or its insurers.

The Solways' application

[16]This
application is brought pursuant to s. 132(1) of the Insurance Act,
which provides as follows:

132. (1) Where a person incurs a liability for injury or damage to the
person or property of another, and is insured against such liability, and
fails to satisfy a judgment awarding damages against the person in respect of
the person s liability, and an execution against the person in respect thereof
is returned unsatisfied, the person entitled to the damages may recover by
action against the insurer the amount of the judgment up to the face value of
the policy, but subject to the same equities as the insurer would have if the
judgment had been satisfied.

[17]The Solways'
claim against Lloyd's and Allianz, therefore, is founded on their unsatisfied
judgment against Kennedy. Having received a nulla bona return from the
sheriff, the Solways have a statutory right to pursue their claim for payment
on the judgment directly as against Kennedy's insurers. In effect, for
purposes of this application, the Solways have stepped into the shoes of
Kennedy in order to seek indemnity under the insurance policies with respect
to the liability of Kennedy for the Solway Judgment.

[18]The Solways'
position is relatively straight-forward: they assert that one or both of
Lloyd's and Allianz is liable to pay their judgment, depending upon the policy
limit and interpretation of the Lloyd's Policy.

[19]As between
Lloyd's and Allianz, Lloyd's asserts that coverage under its policy is limited
to $500,000 and thus Allianz is liable for the balance due to the Solways
pursuant to the excess policy issued by Allianz. For its part, Allianz asserts
that the Lloyd's Policy limit is $1,000,000 and that there is no coverage
under the Allianz Policy for the Solways' claims.

[20]The specific
relief sought by the Solways in their application is as follows:

(a)As against
Lloyd's

(i)a
declaration that they have a cause of action pursuant to s. 132(1) of the
Insurance Act against Lloyd's for the proceeds of the Lloyd's Policy;

(ii)a
declaration that Lloyd's is required to indemnify them for the amount of the
Solway Judgment, subject to the applicable limit of liability contained in the
Lloyd's Policy;

(iii)a
declaration that the applicable limit of liability for the claims of the
applicants under the Lloyd's Policy is at least $500,000 or alternatively
$1,000,000, inclusive of prejudgment interest, but exclusive of the costs
payable under the Solway Judgment and exclusive of post-judgment interest;

(iv)an order
that Lloyd's pay them at least the sum of $500,000 plus the amount of
post-judgment interest on that amount awarded in the Solway Judgment, plus the
costs awarded in the Solway Judgment;

(v)in the
alternative, an order that the sum of $500,000 paid into court be paid out to
them, and that Lloyd's pay them the amount of post-judgment interest on that
amount awarded in the Solway Judgment, plus the costs awarded in the Solway
Judgment.

(b)As against
Allianz:

(i)a
declaration that they have a cause of action pursuant to s. 132(1) of the
Insurance Act against Allianz for the proceeds of the Allianz Policy;

(ii)a
declaration that any amount of the Solway Judgment that is not payable by
Lloyd's shall be payable by Allianz;

(iii)an order
that Allianz pay to them the difference between the amount of the Solway
Judgment and the amount payable by Lloyd's.

(c)As against
the Bertrands, a declaration that the sums referred to in paragraphs (a)(i) to
(a)(v) above be paid to them without any proration with respect to the claims
of the Bertrands.

The Bertrands' "cross-application"

[21]On the date
that this matter was first argued before me, January 26, 2005, counsel for the
Bertrands served and filed a document entitled "notice of cross-application"
seeking relief as against Lloyd's and Allianz. He also sought an adjournment
of the Solways' application pending the final disposition of the Bertrand
Action.

[22]The Bertrands'
adjournment request was not vigorously pressed by their counsel, and I
declined to grant it. I did so on two grounds. Firstly, the Solways' notice of
application was issued and served more than six and one-half months prior to
the date of argument. Counsel for the Bertrands gave no indication prior to
the morning of the scheduled argument that he would seek an adjournment.
Counsel for all other parties had prepared for and were ready to proceed with
the substantive argument before me. Secondly, that six and one-half month
window provided ample opportunity for the Bertrands to press forward with
their claim against Kennedy. Although there was some suggestion that informal
requests for discovery had been made, the Bertrands had taken no formal steps
to move their case forward.

[23]I therefore
concluded that it would be unfair to the Solways to defer indefinitely the
resolution of their claim against the insurers pending the outcome of the
Bertrand Action. I was also conscious of the fact that the outcome of the
Bertrand Action is not necessarily predetermined by the successful outcome of
the underlying Solway Action. The information before me was insufficient to
conclude that a finding of liability in favour of the Bertrands was a forgone
conclusion.

[24]On March 1,
2005, when the argument of the Solways' application resumed and was completed,
counsel for the Bertrands brought a motion for judgment against the defendants
in the Bertrand Action on the issue of liability and for judgment for damages
or an order for a speedy assessment of damages. Counsel for Lloyd's (who acts
for Kennedy in the Bertrand Action) and counsel for Allianz both opposed the
motion arguing that the issues in the Bertrand Action were not necessarily
identical to those in the Solway Action, and the court was not in a position
to resolve the questions of liability or damages raised by the motion. In
effect, it was a motion for summary judgment brought with insufficient
supporting material and inadequate notice. I agreed with those submissions and
declined to entertain the Bertrands' motion for judgment.

[25]With respect
to the Bertrands' so-called "cross-application", I note that, strictly
speaking, such a proceeding is not contemplated by the Rules of Civil
Procedure. Although rule 38.03(4) is entitled "Counter-Application", that
rule provides that a respondent to an application may bring a second
application with a new court file number, naming the original applicant (and
potentially others) as respondents, returnable at the same time and place and
to the same judge as the original application: see Norbett & Associates
Inc. v. 1434267 Ontario Ltd.
2003 CanLII 22650 (ON S.C.), (2003), 63 O.R. (3d) 477 (S.C.J.). The
Bertrands' "cross-application" did not comply with this procedure, nor was it
issued, or served upon any of the other parties, prior to the hearing.

[26]The relief
sought by the Bertrands in their "cross-application" was in large measure
modelled on the relief sought by the Solways in their application. The
Bertrands sought the following relief:

(a)As against
Lloyd's

(i)a
declaration that they have a cause of action pursuant to s. 132(1) of the
Insurance Act against Lloyd's for the proceeds of the Lloyd's policy;

(ii)a
declaration that Lloyd's is required to indemnify them for the amount of their
judgment against Kennedy (a judgment that does not yet exist), subject to the
limit contained in the Lloyd's Policy and subject also to the Solways' claim
for indemnity;

(iii)a
declaration that the applicable limit of liability for the Bertrands' claims
under the Lloyd's Policy is at least $500,000 or alternatively $1,000,000,
inclusive of prejudgment interest, but exclusive of the costs payable under
the Bertrands' judgment and exclusive of post-judgment interest under the
Bertrands' judgment and the Solway Judgment;

(iv)an order
that Lloyd's shall pay the Bertrands their pro-rata proportional share of at
least the sum of $500,000 plus post-judgment interest on that amount, plus the
costs awarded in their judgment;

(v)in the
alternative, an order that the $500,000 paid into court by Lloyd's be paid out
to the Solways and the Bertrands on a pro-rata basis proportionally.

(b)As against
Allianz:

(i)a
declaration that the Solways and the Bertrands each have a separate and
distinct cause of action pursuant to s. 132(1) of the Insurance Act
against Allianz for the proceeds of the Allianz Policy; and

(ii)a
declaration that any amount of the Solway Judgment and the Bertrand judgment
that is not payable by Lloyd's shall alternatively be payable by Allianz on a
pro-rata proportional basis.

[27]As I have
previously noted, the Bertrand Action has not yet proceeded to discovery. The
Bertrands have not been awarded a judgment against Kennedy and thus they have
not had an execution against Kennedy in respect of a judgment returned
unsatisfied. As a consequence, the Bertrands have no right of action under s.
132(1) of the Insurance Act as against either Lloyd's or Allianz at
present.

[28]Despite the
foregoing and despite the technical deficiencies in the Bertrands
"cross-application", the issue of proration as between the Solways' claim and
the Bertrands' claim was already raised in the Solways' application.
Accordingly, while I do not propose to deal with the Bertrands' claim for s.
132(1) Insurance Act relief as against Lloyd's and Allianz, I will deal
with the matter of proration.

Issues and analysis

[29]The disputes
raised by the Solways' application and the positions taken by the parties
require the resolution of the following issues:

1.What
limit in the Lloyd's Policy is applicable to the Solways' claim?

2.Which of
the following items are included or excluded from that limit:

(a)prejudgment
interest that was included in the judgment of Himel J.;

(b)
post-judgment interest that is accruing on the judgment of Himel J.;

(c)costs that
were awarded against Kennedy and in favour of the Solways by Himel J., the
Court of Appeal and the Supreme Court of Canada?

3.Are the
claims of the Solways to be paid without any proration with the claims of the
Bertrands?

4.Is there
coverage for the Solways' claim under the Allianz Policy?

Issue 1 -What limit in the Lloyd's Policy is applicable to the
Solways' claim?

[30]Lloyd's
position is that it was agreed as between insurer and insured (Kennedy) that
any losses that occurred during a move, or during storage incidental to moving
of up to ninety days' duration, would be covered under the transportation
section of the Lloyd's' Policy, with an applicable coverage limit of $500,000.
The position of Allianz is that this claim does not fall under the
transportation coverage provided in the policy, and thus the $500,000 limit
does not apply. Instead, Allianz submits that the relevant policy limit is
that specified under the policy's warehouse and storage coverage, which is
$1,000,000.

[31]The task at
hand, therefore, is to examine the Lloyd's Policy in order to determine which
coverage responds to the Solways' claim.

[32]The normal
rules concerning the construction of insurance contracts lead firstly to a
search for an interpretation which, from the whole of the contract, advances
the true intent of the parties at the time the contract was entered into:
Consolidated Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co.,
[1980] 1 S.C.R. 888. As was said by McLachlin J. in Reid Crowther &
Partners Ltd. v. Simcoe & Erie General Insurance Co.,
1993 CanLII 150 (S.C.C.), [1993] 1 S.C.R. 252 (at 268-269):

In
each case the courts must examine the provisions of the particular policy at
issue (and the surrounding circumstances) to determine if the events in
question fall within the terms of coverage of that particular policy. This is
not to say that there are no principles governing this type of analysis. Far
from it. In each case, the courts must interpret the provisions of the policy
at issue in light of general principles of interpretation of insurance
policies, including, but not limited to:

(1)
the contra proferentum rule;

(2) the principle that coverage provisions should be construed broadly
and exclusion clauses narrowly; and

(3) the desirability, at least where the policy is ambiguous, of giving
effect to the reasonable expectations of the parties.

The
insurance provided by this policy applies with respect to property of any
description, the property of others, from the time such property comes into
the care, custody or control of the Insured or its authorized agents for the
purpose of transportation or storage including all handling incidental
thereto.

2.
SCOPE OF INSURANCE

The
Insurer agrees to pay:

A. As respects property under a Bill of Lading, similar shipping
document or agreement under which the Insured has agreed to provide Declared
Valuation Protection, for direct loss, destruction or damage (including
General Average and Salvage charges) of the Property Insured occasioned by all
risks, except as hereinafter excluded, provided such loss, destruction or
damage occurs while in due course of transit, including handling for packing
and unpacking, or while in storage incidental to transit for a period not
exceeding 90 days.

B. As respects property under a Warehouse Receipt or similar document
under which the Insured has agreed to provide insurance to protect the
interest of the owner(s) of the Property Insured while in storage in any
location(s) described in the Schedule of this policy, including while in
transit thereto or therefrom in or on trucks or trailers operated by the
Insured or his authorized representative, for direct loss, destruction or
damage (including General Average and Salvage charges) of the Property Insured
by all risks except as hereinafter excluded.

C. To the extent that such is not provided for under sub-paragraphs A or
B above, all sums which the Insured shall become obligated to pay by reason of
the liability imposed by law upon, or assumed under agreement by, the Insured
as a private or common carrier or warehouseman.

.

4.
LIMITS OF LIABILITY

The
insurer shall not be liable under this policy for more than:

(a) As respects claims made under sub-paragraphs A and B of Scope of
Insurance the amount of insurance or Declared Valuation agreed between the
Insured and the Owner(s) of the Property Insured.

(b) As respects claims made under sub-paragraphs A and C combined, in no
event for more than the Limit Of Liability expressed in the Schedule as
applicable to Transportation Insurance in any one occurrence.

(c) As respects claims made under sub-paragraphs B and C combined, in no
event for more than the Limit of Liability expressed in the Schedule as
applicable to Warehouse Insurance in any one occurrence.

.

GENERAL CONDITIONS

.

2. DEFENCE COSTS

The Insurer further agrees to defend in the name and on behalf of
the Insured and at the cost of the Insurer any civil action which may at any
time be brought against the Insured on account of such property damage, which
costs shall be in addition to the applicable limit of liability stated
elsewhere herein.

3. ADMISSION OF LIABILITY AND ACTION

(a) The Insured shall have the right to settle any claim not exceeding
the deductible amount without prior reference to the Insurer.

The insured shall not otherwise admit any liability and as respects claims
under C of Scope Of Insurance the Insurer hereby reserves the right to
compromise or contest at its option, on behalf of and in the name of, but with
no expense to the Insured, any and all claims made against the Insured in
respect of liability covered by this Policy.

.

6.
VALUATION

Except where clause 8 - Replacement Cost - applies, as respects claims made
under paragraph A or B of Scope Of Insurance of this policy the Insurer agrees
to pay not exceeding the actual cash value or cost of repair of property lost,
damaged or destroyed, nor exceeding as respects any one in transit or in
storage lot the value declared in the applicable Bill of Lading, Warehouse
Receipt or similar document.

As
respects claims made under paragraph C of Scope Of Insurance under this
policy, the Insurer agrees to pay all sums for which the Insured is legally
liable subject to the limits of liability of the Transportation and Storage
Sections.

.

[35]Lloyd's
submits that the Solways' claim falls within Scope of Insurance 2A. It submits
that the Solways' goods were property under a bill of lading and that the loss
occurred while the goods were in storage incidental to transit for a period of
less than 90 days. With respect to the limit of liability, Lloyd's submits
that limit 4(a) is not applicable, because there was no amount of insurance or
declared valuation agreed between Kennedy and the Solways. Rather, Lloyd's
submits that limit 4(b) applies, because it is a claim under Scope of Coverage
2A. As a result, the policy limit applicable to Transportation Insurance
($500,000) governs.

[36]For its part,
Allianz submits that the claim does not fall within paragraph 2A of the Scope
of Insurance, because Kennedy did not agree to provide declared valuation
protection. Similarly, Allianz submits, Coverage 2B is inapplicable, because
Kennedy did not agree to provide insurance to protect the Solways' property
while it was in storage. Instead, the argument continues, because it is
outside 2A and 2B, the Solways' claim falls within Scope of Insurance 2C. The
relevant policy limit is found in the General Conditions, paragraph 6, which
references the limits of liability of the Transportation and Storage Sections.
Since Kennedy's liability to the Solways was for breach of a storage
agreement, the storage limit ($1,000,000) governs.

[37]The first
point to determine, therefore, is whether Kennedy's entitlement to payment
under the Lloyd's Policy falls within Scope of Insurance 2A, 2B or 2C. As I
noted early in these reasons, the Solways gave their goods to Kennedy pursuant
to a bill of lading. That document contained the following provision (which
was at the heart of the Solway v. Kennedy litigation):

Unless value is declared and additional protection is requested, carrier's
liability is limited to $0.60 per pound per article including contents,
whether such loss or damage is arising out of storage, transportation,
packing, unpacking or handling. If additional protection is requested, the
carrier's liability is limited in the case of loss or damage of the entire
shipment to the amount of the declared value. In the case of partial loss or
damage, it will be limited to the portion of such loss and damage which such
declared value bears to the true market value of the entire shipment.

No declared valuation was inserted in the Solway bill of
lading and the goods were released to Kennedy at a value of $0.60 per pound
per article.

[38]It may thus be
seen that the Solway-Kennedy bill of lading did not include or provide for
protection for the owner of the goods based upon a declared valuation. Lloyd's
submits, however, that the words "Declared Valuation Protection" in Scope of
Insurance 2A apply only to the words "agreement under which the insured has
agreed to provide Declared Valuation Protection" and do not apply to the words
"Bill of Lading" in the opening phrase of that paragraph. I disagree, for
several reasons.

[39]Firstly, the
references to "Bill of Lading" and "Declared Valuation Protection" in Scope of
Insurance 2A cannot be viewed in isolation. For example, in General Condition
6 Valuation, the insurer's liability is limited to "the value declared in
the applicable Bill of Lading". This is consistent with the limit found in
Limits of Liability paragraph 4(a), which is stated to be the "Declared
Valuation agreed between the Insured and the Owner(s) of the Property Insured"
for claims made under Scope of Insurance 2A. The scheme of the policy,
therefore, contemplates that where the insured has agreed to provide declared
valuation protection (which can be provided under a bill of lading, similar
shipping document or other agreement) and a loss occurs, the insurer agrees to
indemnify the insured for the amount of the declared valuation. To somehow
isolate the opening phrase of paragraph 2A, as Lloyd's submits, is illogical
and inconsistent with the scheme of the policy.

[40]Secondly, the
interpretation for which Lloyd's contends is a restrictive one. It conflicts
with the principle that coverage provisions should be construed broadly, as
well as the contra proferentum rule. From a grammatical point of view,
the words "under which the Insured has agreed to provide Declared Valuation
Protection" contained in paragraph 2A can fairly be read as referring to
"property under a Bill of Lading, similar shipping document or agreement".

[41]It follows
that Coverage 2A is applicable to property under a bill of lading only where
the insured has agreed to provide declared valuation protection. The Solway-
Kennedy bill of lading did not provide for that protection. I therefore
conclude Coverage 2A is inapplicable.

[42]The coverage
provided by Scope of Insurance 2B extends to "property under a Warehouse
Receipt or similar document under which the Insured has agreed to provide
insurance to protect the interest of the owner(s) of the Property Insured
while in storage". It is common ground that no warehouse receipt was provided
nor did Kennedy agree to provide insurance to protect the Solways' interest in
their belongings. It follows that Coverage 2B is inapplicable.

[43]Scope of
Insurance paragraph 2C provided insurance to Kennedy for liability that might
be imposed upon it by law as a private or common carrier or warehouseman, to
the extent not provided under 2A or 2B. Liability has been imposed by the
judgment of Himel J. Neither Coverage 2A nor Coverage 2B is applicable. It
therefore follows that Kennedy's rights to indemnity under the Lloyd's Policy
arise under Coverage 2C.

[44]I turn now to
the policy limit issue. The insurance limits under Coverage 3B for
Transportation and Storage are found in two locations. Firstly, paragraph 4
entitled "Limits of Liability" contains in separate sub-paragraphs limits for
(a) "claims made under sub-paragraphs A and B of Scope of Insurance"; (b)
"claims made under sub-paragraphs A and C combined"; and (c) "claims made
under sub-paragraphs B and C combined".

[45]Secondly,
under General Condition 6 "Valuation" another limit of liability is expressed,
as follows:

As
respects claims made under paragraph C of Scope Of Insurance under this
policy, the Insurer agrees to pay all sums for which the Insured is legally
liable subject to the limits of liability of the Transportation and Storage
Sections.

[46]For the
reasons previously expressed, Kennedy's claim for indemnity in respect of the
Solway judgment does not fall within sub-paragraph 2A or sub-paragraph 2B of
the Scope of Insurance; rather it falls exclusively under Coverage 2C. As
such, limit of liability 4(a) is inapplicable. Since the Kennedy claim for
indemnity is not combined with a claim under Coverage 2A or Coverage 2B, it is
neither a claim made under sub-paragraphs 2A and 2C combined nor under
sub-paragraphs 2B and 2C combined. As a result, the limits of liability
expressed in paragraphs 4(b) and 4(c) have no application. The only remaining
limit of liability that could be applicable is the one contained in General
Condition 6 and I conclude that it is.

[47]General
Condition 6 references "the limits of liability of the Transportation and
Storage Sections". Leaving aside limits applicable to situations involving
declared valuations or agreements by the insured to provide a specified amount
of insurance, there are two limits of liability referenced in the
"Transportation & Storage" section of the policy: one that is applicable to
"Transportation Insurance" (as mentioned in paragraph 4(b)) and another that
is applicable to "Warehouse Insurance" (as mentioned in paragraph 4(c)).
According to the policy declarations, these limits are $500,000 for
Transportation Insurance and $1,000,00 for Warehouse Insurance.

[48]Although the
policy declarations specify $1,000,000 as the amount of "Warehouse Insurance",
Coverage 3B "Customers Goods Insurance" is subtitled "Transportation &
Storage". The term "storage" is also used in subparagraph 2B with reference to
goods held by the insured under a warehouse receipt. It thus appears that the
terms "warehouse" and "storage" are used in the policy interchangeably. I
therefore conclude that a claim founded on a breach of a storage contract
would be subject to the Warehouse Insurance limit.

[49]The
determination of which policy limit is applicable thus comes down to the
proper characterization of the claim in respect of which Kennedy seeks
indemnity under the policy, namely, the Solway Judgment. In turn, the Solway
Judgment is founded upon the reasons for decision of Himel J. Excerpted below
are the relevant findings contained in that decision (found in the indicated
paragraphs):

[81] I find that the plaintiffs [the Solways] arranged to have their goods
stored in the trailer for the two week period. I do, however, find as fact
that Ms. Akler and Mr. Kennedy [sic] were given assurances that their
goods would be secure.

[83] I also find that it was intended that the storage be on the Kennedy
parking lot. I find that at no time, were the plaintiffs advised that
their goods would be stored in a trailer parked unattended on a public street
nor did they consent to such an arrangement.

.

[90] The central question in this case in whether the plaintiffs must bear the
loss because of a limitation of liability clause in the contract or whether
that clause does not apply ad the defendant [Kennedy] is responsible.

.

[92] The contract between the parties was for carriage and storage of goods.
That contract was partly written and partly oral consisting of the proposal,
the oral arrangements and the bill of lading. Under the terms of the contract,
failure to deliver the goods is a breach and the defendant is liable.

.

[95] This question can only be resolved by determining the terms of the
contract with respect to security. I am satisfied on a balance of
probabilities that the parties agreed that the plaintiffs' goods would be
placed in a trailer for the two-week period. I find that trailer storage was a
term of the contract.

[96] As to the type of security it is agreed that Kennedy was to provide
safekeeping of the plaintiffs' belongings by parking the trailer in the
parking lot, removing the landing gear, and locking the trailer. The
plaintiffs relied upon that term of the agreement when it [sic] entered
into the contract with the defendant.

.

[98] It was always intended and the plaintiffs never were told otherwise that
their belongings would be stored on a trailer parked on the Kennedy premises.
When they moved the trailer to the street, Kennedy did not provide any
surveillance. The area was quiet and deserted at night. The trailer could have
been watched or at least, moved back to the parking lot as soon as the
ploughing was complete rather than left overnight on the street. Steps could
have been taken to exercise care in protecting the property that was in their
possession.

[99] In cases where loss results because of the acts of a third party, the
issue is which party should bear the loss? The plaintiffs argue that they
entered the contract with Kennedy because they were assured of security of
their belongings.

[100] In my view, it is the defendants who should bear those losses which were
attributable to the breach of the contract between the parties [and] they
cannot rely on a limitation of liability clause where it would be unreasonable
to enforce it in the circumstances.

[50]It may thus be
seen that the basis of the finding of liability imposed by Himel J. was a
breach of the term of the contract between the Solways and Kennedy regarding
the security to be provided while the goods were stored in the Kennedy
trailer. As such, liability was founded upon a breach of the parties' oral
agreement concerning the storage of the Solways' goods, and was not founded
upon a breach of the contract for their transportation.

[51]In my opinion,
by reason of the fact that liability was imposed upon Kennedy for breach of a
contractual term relating to the storage of a customer's goods, the policy
limit relating to claim arising from the transportation of customers' goods is
not applicable. I am alert to the closing words in Scope of Insurance
paragraph 2A, which refer to losses "while in storage incidental to transit
for a period not exceeding 90 days". Those words only come into play, however,
for claims that fall within the scope of paragraph 2A. For reasons previously
articulated paragraph 2A has no application to the present claim.

[52]I therefore
conclude that the appropriate policy limit is that applicable to warehouse and
storage claims. Pursuant to the policy declarations, the amount of Warehouse
Insurance is $1,000,000. In my opinion that is the limit in the Lloyd's Policy
that is applicable to the Solway claim.

Issue 2 -Which of the following items are included or excluded from
that limit?

[53]In light of my
conclusion that the applicable policy limit under the Lloyd's Policy is
$1,000,000 and the total amount due by Kennedy to the Solways inclusive of
claim, pre- and post-judgment interest and costs is within that limit,
strictly speaking I need not rule on these points. Because they were argued
before me, because my analysis of these issues may assist the parties in the
ultimate resolution of the Bertrands' claim, and because an appellate court
may disagree with my conclusion on the policy limit issue, and recognizing
that these comments are obiter dicta, I propose to offer my conclusions
on these points.

(a)Prejudgment interest that was included in the
judgment of Himel J.

[54]It was
conceded by the Solways that, pursuant to undisputed case law, the policy
limit is inclusive of prejudgment interest.

(b)Post-judgment interest that is accruing on the
judgment of Himel J.

[55]The Lloyd's
Policy is silent as to whether post-judgment interest is included or excluded
from the policy limit.

[56]In my view,
post-judgment interest is payable in addition to the policy limit. Pursuant to
s. 129 of the Courts of Justice Act,
R.S.O., 1990 c. C.43, post-judgment interest accrues automatically unless
the court exercises its discretion under s. 130 to disallow interest. Once a
final judgment has been rendered against an insured, the insured becomes a
judgment debtor and is required to pay the amount of the judgment. Any delay
by the insurer in paying the judgment pursuant to its obligation to indemnify
the insured, results in the accrual of post-judgment interest which the
insured is required to pay to the judgment creditor.

[57]In the absence
of any express contractual provision, I can see no good reason for
post-judgment interest to be included within the policy limit. This can be
illustrated by positing the situation where a judgment is granted against an
insured for an amount equal to or greater than the policy limit. In such a
situation, if post-judgment interest was included in the policy limit the
insurer could (theoretically) delay payment with virtual impunity by, for
example, prosecuting an unmeritorious appeal, since its exposure to its
insured would be capped at the policy limit. Meanwhile, post-judgment interest
would continue to accrue. In light of the insured's obligation to pay
post-judgment interest once a claim has been crystallized into a judgment, it
makes sense to impose a like obligation on the insurer, regardless of the
policy limit.

(c)Costs that were awarded against Kennedy and in
favour of the Solways by Himel J., the Court of Appeal and the Supreme Court
of Canada

[58]Lloyd's argues
that these costs are included in the policy limit. It points to the absence of
express language in the policy obliging it to indemnify the insured for costs
awarded against the insured on top of the policy limit. Lloyd's refers to
language contained in the Commercial General Liability portion of the policy
(Coverage 2) in which the insurer expressly agreed to pay costs awarded
against the insured and further agreed that those payments would not reduce
the limits of insurance. No such express language is contained in the
Customers Goods Insurance (Coverage 3) portion of the policy.

[59]I do not
accept the foregoing submission. Article 2 of the General Conditions of
Coverage 3B provides that: "The Insurer agrees to defend at the cost of
the Insurer any civil action which may be brought against the Insured on
account of such property damage, which costs shall be in addition to the
applicable limit of liability ." General Condition 3 entitled "Admission of
Liability and Action" includes the following language:

as
respects claims under C of Scope Of Insurance the Insurer hereby reserves the
right to compromise or contest at its option, on behalf of and in the name of,
but with no expense to the Insured, any and all claims made against the
Insured in respect of liability covered by this Policy.

[60]In the present
case, Lloyd's elected to defend the Solway Action. As a result of that
unsuccessful defence, on top of Kennedy's liability for the Solways' loss and
prejudgment interest on that sum, Kennedy stands exposed to an adverse costs
award for more than $110,000.

[61]Applying the
principles of broad construction of coverage provisions, narrow construction
of exclusion clauses and the contra proferentum rule, I conclude that
the correct interpretation of the words "with no expense to the Insured" in
General Condition 3 is that the insured is not to be called upon to bear any
expense arising from the defence of a claim, whether payable to its own
solicitors or to the opposite party. It is well known that, almost invariably,
one of the expenses involved in litigation is that incurred by an unsuccessful
party who is ordered to pay costs to a successful adversary.

[62]I acknowledge
that in another portion of the policy the insurer chose to address this topic
with more specific language. That provision, however, related to different
coverage. In relation to the coverage that is responsive to the Solways' claim
against Kennedy, however, the court must have regard to the language that the
insurer chose to include as part of the general conditions applicable to this
specific coverage.

[63]Since I have
concluded that the costs of defending the Solway Action, including any award
of costs made by the court in favour of the Solways ought not be borne by
Kennedy, it follows that it is my opinion that any costs awarded against
Kennedy and in favour of the Solways should be excluded from the policy limit.

Issue 3 -Are the claims of the Solways to be paid without any
proration with the claims of the Bertrands?

[64]As I have
previously observed, the Bertrand Action has yet to proceed to discovery and
thus the Bertrands do not yet have a claim against the insurers under s. 132
of the Insurance Act. While both Lloyd's and Allianz are on notice of
the Bertrands' potential claim against the insurance monies, the question
arises whether that potential claim can or should hinder full payment of the
Solway Judgment now.

[65]The potential
requirement for an insurer to ascertain all claimants under a policy before
paying any of them was considered in Laidlaw Inc. Re (2003), 46 C.C.L.R.
(3d) 263 (S.C.J.) (at paras 13 and 14) where Farley J. he said:

I do
not see that there is any provision in the subject Policies which would allow
or require [the insurer] to consider claims or potential claims which have not
been finally determined by judgment or settlement as opposed to its obligation
to pay claims which have been finally determined. To impose a requirement on
[the insurer] (and a restriction on a successful claimant's direct right)
which would oblige [the insurer] to defer payment (and the claimant
collection) until such time as all claims and potential claims under the
subject Policies are known and finally determined would constitute an
unwarranted rewriting of the subject Policies. See University of
Saskatchewan v. Fireman's Fund Insurance of Canada, [1998] 5 W.W.R. 276
(Sask. C.A.) at p. 289; leave to appeal to the Supreme Court of Canada refused
[1997] S.C.C.A. No. 641.

It
seems to me that at common law as discussed in Cox v. Bankside Members
Agency Ltd., [1995] 2 Lloyd's Law Reports 437 (C.A.) that the "first past
the post" or "first come, first served" principle was determined to be
appropriate and in the interests of overall fairness. See Sir Thomas Bingham
M.R.'s view, especially at pp. 457-60. He stated at p. 457:

It was inherent in the Judge's approach that he considered chronological
priority to be the basic rule, from which any departure must be justified.
This approach was not challenged, and is plainly correct. In the absence of a
stay, a successful plaintiff may enforce his judgment against the defendant as
soon as it is given, and if an insured defendant is insolvent he may seek to
be indemnified (subject to the terms of the policy) directly by the insurer.
There must be some good reason for departing from the basic rule that a
successful plaintiff is entitled to the fruits of his judgment.

Saville, L.J., added at pp. 466-7:

I can see no reason why equity should intervene to require that those first
to call on the policy should have to share their recoveries with later
claimants if and when the insurance became exhausted.

Farley J. further observed (at para. 16):

I
have found nothing in the Ontario Insurance Act which would require a
deviation from the first past the post principle.

[66]Counsel for
the Bertrands submits that his clients' circumstances warrant a departure from
the prevailing principle that I have quoted above. He argues that, as a matter
of judicial economy, his clients refrained from litigating their claim while
the Solway Action proceeded more or less as a "test case". He submits that it
would be contrary to the policy of encouraging economy and efficiency in the
application of judicial resources to, in effect, penalize the Bertrands for
being patient while the underlying legal principles were determined in
parallel proceedings. To hold otherwise would be to force parties such as the
Solways and the Bertrands to engage in competing and sometimes duplicative
litigation with a view to becoming the first party to secure a final judgment
and collect the insurance proceeds.

[67]In my view,
the Bertrands' circumstances do not warrant a departure from the prevailing
principle articulated by Farley J. To begin with, there is no evidence before
me reflecting any express agreement among any of the parties that the Solway
Action would proceed as a test case or that the rights that normally accrue to
a successful plaintiff would not be enjoyed by the Solways. Likewise, there is
no evidence to indicate a willingness on the part of the Bertrands to help to
underwrite the costs of the Solway Action or to assist in the payment of any
adverse order as to costs that might have been made against the Solways should
their proceeding have been unsuccessful. I mention these factors because, in
my view, they are relevant to deciding whether equity should intervene to
provide the Bertrands with a share of the fruits of the Solways' labours.

[68]With respect
to the matter of judicial economy, I note that the underlying liability issue
in the Solway Action was finally determined on May 29, 2003 when the Supreme
Court of Canada dismissed Kennedy's leave application. Notwithstanding that
event and the subsequent passage of some twenty-one months, the Bertrands have
taken no formal steps to advance their own claim, apart from the notice of
cross-application served on January 26, 2005 and the notice of motion brought
on March 6, 2005. In these circumstances I do not consider that equity
requires a departure from the standard "first past the post" rule. Indeed, in
my view, it would be inequitable to deprive the Solways of their entitlement
to make first claim against the available insurance monies.

[69]I therefore
conclude that the claims of Solways should be paid without any proration with
the claims of the Bertrands.

Issue 4 -Is there coverage for the Solways' claim under the Allianz
Policy?

[70]In light of
the conclusions that I have reached above, the Solway Judgment and all
subsequent costs awards in favour of the Solways will be covered by the
Lloyd's Policy. I therefore do not need to address this issue.

Conclusion and disposition

[71]For the
foregoing reasons, I conclude that the policy limit in the Lloyd's Policy
applicable to the Solways' claim under s. 132 of the Insurance Act is
$1,000,000. An order shall therefore issue:

(a)declaring
that the Solways have a cause of action pursuant to s. 132(1) of the
Insurance Act against Lloyd's in respect of the proceeds of the Lloyd's
Policy;

(b)declaring
that Lloyd's is required to indemnify the Solways for the full amount of the
Solway Judgment, including the costs payable thereunder and accrued
post-judgment interest;

(c)directing
that the funds paid into court by Lloyd's on May 13, 2004, together with all
accrued interest, be paid out to the Solways in partial satisfaction of
Lloyd's liability to them under (b) above;

(d)ordering
Lloyd's to pay to the Solways directly the remaining sum due to them after
deducting the amount received by the Solways under (c) above; and

(e)declaring
that the sums payable to the Solways pursuant to (b), (c) and (d) above shall
be paid to them without any proration with respect to the claims of the
Bertrands.

[72]If the parties
are unable to resolve the issue of costs, they should arrange a conference
telephone call with me for purposes of determining a suitable process for the
resolution of that issue. That process should also extend to the payment of
the costs of the settlement conference attendances before Wilkins J. that took
place pursuant to the directions given by me on January 26, 2005.

___________________________

Stinson J.

DATE: April 8, 2005

COURT FILE NO.:
04-CV-272027CM1

DATE: 20050408

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

STUART SOLWAY and GAYLE AKLER

Applicants

- and -

ATTORNEY IN FACT IN CANADA FOR LLOYD'S UDERWRITERS, ALLIANZ INSURANCE
COMPANY OF CANADA, RENE BERTRAND, and ELAINE BERTRAND

[1] The appellant, Kennedy Moving Systems, appeals from the judgment of Himel J.
which held that Kennedy Moving was not permitted to rely upon a limitation of
liability clause contained in a bill of lading for the move and storage of the
respondents' goods. The appellant also appeals the award of damages per quod
servitium amisit in favour of Sparkplug Marketing & Communications Inc. and Pen
Station Inc., two corporations owned by the individual plaintiffs/respondents.
The respondents cross-appeal from the finding that Sparkplug Marketing and Pen
Station were not entitled to damages for loss of income.

[2] The plaintiffs, Akler and Solway, entered into a contract with Kennedy
Moving to have their household goods removed from their house, stored briefly,
and delivered to their new house. While being stored in a trailer, the trailer
was parked overnight, unattended on a public street overnight. The trailer with
the plaintiffs' goods was stolen.

[3] The plaintiffs claimed for the replacement cost of their possessions. They
also claimed income loss for their corporations as a result of the time spent on
the fallout from the theft. The defendant, Kennedy Moving, admitted liability
for the loss of the goods, but only to the extent of the terms of the bill of
lading and Regulation 1088 passed pursuant to the Truck Transportation Act,
R.S.O. 1990, c. T.22. The bill of lading and the Regulation would limit the
claim to $0.60 per pound, for a total of $7,089.60.

[4] The trial judge found that the plaintiffs were aware of the limitation of
liability clause when they entered into the transaction and that they had taken
steps to obtain additional insurance coverage with their own insurer.

[5] The plaintiffs had initially contacted Kennedy Moving because they had been
satisfied with its performance in an earlier move. Although they had obtained a
quotation from a competitor, they opted to go with Kennedy Moving because of
both their past experience and because it seemed so professional. Akler
testified that Kennedy Moving's affiliation with Atlas Van Lines, which was a
household name, gave them comfort and assurance. [page526]

[6] The plaintiffs testified that Kennedy Moving had represented that their
goods would be secure during the move. Kennedy Moving would provide safekeeping
of their goods by parking the trailer in the Kennedy Moving yard, removing the
loading gear, locking the trailer, and locking the air brakes. Akler testified
that she did not tell anyone at Kennedy Moving the value of her goods, but did
emphasize the importance of certain items. It was clearly important to the
plaintiffs that their goods be secure. The trial judge found that they were
given assurances to that effect.

[7] There was good reason for the plaintiffs to be concerned with security. The
household goods that were stolen included rare and valuable artifacts and
antiques collected by the plaintiffs throughout their marriage while travelling
in Canada, the United States, South America, Europe and Australia. The
plaintiffs' 65-page list of the contents and particulars that were stolen
included pieces of art, wedding photographs, antique furniture, needlepoints,
carvings, recordings, compact discs and books.

[8] Mr. Peterson, a member of Kennedy Moving's sales staff, attended at the
plaintiffs' house to provide corporate literature and review the contents of the
house. Akler claimed that Peterson commented that they had many nice antiques
and a lot of furniture. Peterson did not recall visiting with the plaintiffs in
their home. The trial judge found that Peterson had a selective memory. Although
she accepted his evidence as to general practices or procedures, she did not
find his evidence reliable with respect to the specific recollection of events.
Since Peterson did attend at the plaintiffs' home, he was likely aware that
their possessions were not simply ordinary household goods.

[9] Although the trailer in which the plaintiffs' goods were stored was locked,
its landing gear was put down and it was detached from the truck, the trailer
was not stored on the Kennedy parking lot. Instead, the trailer was left on the
street to enable snowploughing to be done on the lot. The trailer and its
contents were stolen from that location.

[10] The trial judge found that the plaintiffs were never advised that their
goods would be left in a trailer, parked unattended on a public street. The
trial judge accepted that Akler was devastated when she learned of the theft of
the goods. More specifically, Himel J. referred to the evidence of the plaintiff
that "she was completely overwhelmed as virtually everything they owned was
gone, including items of sentimental value. She said she felt violated.

[11] The trial judge found that Kennedy Moving had given false assurances that
the goods would be secured that had induced the plaintiffs to agree to the
limitation clause. [page527]

[12] In considering whether or not Kennedy Moving should be permitted to invoke
the limitation of liability clause, the trial judge relied on the decision of
the Supreme Court of Canada in Hunter Engineering Co. v. Syncrude Canada Ltd.,
[1989] 1 S.C.R. 426, 57 D.L.R. (4th) 321.

[13] In Fraser Jewellers (1982) Ltd. v. Dominion Electric Protection Co. (1997),
34 O.R. (3d) 1, 148 D.L.R. (4th) 496 (C.A.) at p. 8 O.R., this court reviewed
the decision in Hunter Engineering and noted that, in that case, the Supreme
Court of Canada was unanimous in holding that, while limitation of liability
provisions, prima facie, were enforceable according to their true meaning, a
court was empowered in limited circumstances to grant relief against provisions
of this nature. The Supreme Court of Canada, however, was evenly divided on the
question of the test to be used to determine when or in what circumstances the
power to grant relief should be exercised.

[14] In Hunter Engineering, Chief Justice Dickson, writing for himself and La
Forest J., rejected the doctrine of fundamental breach and the uncertainty that
was related thereto. As an alternative, he adopted a more direct approach to
dealing with potentially unfair contracts. He stated, at p. 462 S.C.R., p. 342
D.L.R.:

Only where the contract is unconscionable, as might arise from situations of
unequal bargaining power between the parties, should the courts interfere with
agreements the parties have freely concluded. The courts do not blindly enforce
harsh or unconscionable bargains . . . Explicitly addressing concerns of
unconscionability and inequality of bargaining power allow the courts to focus
expressly on the real grounds for refusing to give force to a contractual term
said to have been agreed to by the parties.

(Emphasis added)

[15] By way of contrast, Wilson J., writing for herself and L'Heureux-Dub J.,
adopted an approach first accepted by the Ontario Court of Appeal and then by
the Supreme Court of Canada in Beaufort Realties (1964) Inc. v. Chomedey
Aluminium Co. Ltd., [1980] 2 S.C.R. 718, 116 D.L.R. (3d) 193. In explaining this
approach at p. 510 S.C.R., p. 376 D.L.R., Madam Justice Wilson was of the view
that courts need "to determine whether in the context of the particular breach
which had occurred it was fair and reasonable to enforce the clause in favour of
the party who had committed the breach" (emphasis in original).

[16] McIntyre J., the other member of the court, did not address this issue.

[17] Robins J.A., speaking for this court, reconciled these two approaches in
Fraser Jewellers, at p. 10 O.R., as follows:

[W]hether the breach is fundamental or not, an exclusionary clause of this kind,
in my opinion, should, prima facie, be enforced according to its true [page528]
meaning. Relief should be granted only if the clause, seen in the light of the
agreement, can be said, on Dickson C.J.C.'s test, to be "unconscionable" or, on
Wilson J.'s test, to be "unfair or unreasonable". The difference in practice
between these alternatives, as Professor Waddams has observed, "is unlikely to
be large": Waddams, The Law of Contract, 3rd ed. (1993), at p. 323.

[18] In this case, the plaintiffs' goods were highly valuable, both in monetary
and sentimental terms. As such, they took special care to choose a moving
company that would provide the security they felt was essential. Based on their
past experience with Kennedy Moving, its apparent professionalism, and its
affiliation with Atlas Van Lines, the plaintiffs made what they thought was an
informed decision to opt for Kennedy Moving.

[19] Despite Kennedy Moving's assurances to the contrary, the plaintiffs' goods
were not, however, kept in secure conditions. The trailer containing their goods
was left overnight on the street with no surveillance. As the trial judge noted,
Kennedy Moving should have anticipated that a theft might occur if the trailer
was left unattended overnight on a public street. The plaintiffs were never
advised that their goods would be stored in these conditions, and they certainly
never agreed to such an arrangement.

[20] In deciding not to enforce the limitation clause, the trial judge appears
to have equated the words, "unconscionable" and "unreasonable" as these terms
were discussed in Hunter Engineering. In our view, on the facts as found by the
trial judge, to limit the loss of the plaintiffs to $7,089.60 would, in the
words of Dickson C.J.C. be "unconscionable", or in the words of Wilson J. be
"unfair or unreasonable". This is one of those cases where relief should be
granted.

[21] The conclusion of the trial judge is amply supported by the evidence. It
also accords with principles of contract law. We see no basis to interfere.

[22] With respect to the corporate plaintiffs, the trial judge noted the lack of
privity of contract between the corporations and Kennedy Moving. She concluded
that the requirement of sufficient proximity was not met and the corporations
were not entitled to damages arising out of the breach of contract of Kennedy
Moving. We see no error on the part of the trial judge in this respect.

[23] However, the trial judge did award compensation to replace the services of
the individual plaintiffs in the amount of $8,000 for Sparkplug and $2,500 for
Pen Station. A claim for per quod servitium amisit was not pleaded and there was
no evidence that the plaintiffs spent any money replacing their services.
[page529] Moreover, in light of the findings of the trial judge with respect to
the claims of the corporations for loss of income, there was no basis to award
these damages.

[24] The appeal is allowed in accordance with these reasons and paras. 6 and 7
of the judgment dated December 19, 2001 are set aside. Paragraph 9 is varied to
provide prejudgment interest in accordance with s. 128(1) of the Courts of
Justice Act, R.S.O. 1990, c. C.43.

[25] In all other respects, the appeal is dismissed. The cross-appeal is also
dismissed. Although success of the appeal and cross-appeal is divided, the
disposition of the appeal largely favours the respondents. The costs to the
respondents are fixed at $13,000.

[26] CARTHY J.A. (dissenting): I agree with my brother Labrosse J.A. as to his
disposition of the claims on behalf of the corporations, but respectfully
disagree with his conclusion that the individual respondents should recover
damages on the basis of fundamental breach of contract.

[27] The trial judge found that the homeowners were intelligent and
sophisticated business people, that they knew of the limitation of liability
provision in the contract, and that they arranged their own insurance (said now
to be insufficient) to protect against loss during the move. The household goods
were to be held for three days in a trailer to be locked down on an unfenced lot
adjacent to the mover's warehouse. The trailer was moved to the street in front
of the premises over one night to permit snow removal [on] the lot. It was
appropriately locked down, but somehow thieves managed to haul it away and the
contents were never found. In almost 30 years in the family business of
household moving, the personnel of the appellant had never experienced or heard
of such a theft.

[28] In my view that description is of a loss which is clearly covered by the
statutory limitations of liability embodied in the contract with the appellants
and should have limited the liability to $7,089.60.

. . . I am satisfied on a balance of probabilities that the parties agreed that
the plaintiffs' goods would be placed in a trailer for the two week period. I
find that trailer storage was a term of the contract.

As to the type of security, even on the defence evidence, it is agreed that
Kennedy was to provide safekeeping of the plaintiffs' belongings by parking
[page530] the trailer in the parking lot, removing the landing gear, and locking
the trailer. The plaintiffs relied upon that term of the agreement when it
entered into the contract with the defendant.

The trailer storage facilities of Kennedy involved parking the trailer in its
yard with the landing gear down, the air brakes locked and the trailer locked.
There were no fences, no cameras and no monitoring.

It was always intended, and the plaintiffs were never told otherwise that their
belongings would be stored on a trailer parked on the Kennedy premises. When
they moved the trailer to the street, Kennedy did not provide any surveillance.
The area was quiet and deserted at night. The trailer could have been watched or
at least, moved back to the parking lot as soon as the ploughing was complete
rather than left overnight on the street. Steps could have been taken to
exercise care in protecting the property that was in their possession.

In cases where loss results because of the acts of a third party, the issue is
which party should bear the loss? The plaintiffs argue that they entered the
contract with Kennedy because they were assured of security of their belongings.

In my view, it is the defendants who should bear those losses which were
attributable to the breach of the contract between the parties they cannot rely
on a limitation of liability clause where it would be unreasonable to enforce it
in the circumstances.

[30] Before going further, I would be critical of these reasons, if on no other
account, for reliance on evidence that the consignors were given assurance of
security of their belongings. That assurance must be implicit in every contract
for carriage of goods and cannot weaken a limitation of liability clause that
contemplates claims where security breaks down and a loss occurs. I would also
point out in passing that there is no reason to conclude that the trial judge
meant "unconscionable" when she said "unreasonable".

[31] My major disagreement with the trial judge's reasons is with her
application of the reasons in Hunter. It is generally considered that there is
little room remaining for setting aside an exemption provision on the basis of
fundamental breach following Hunter. See per Finlayson J.A. Kordas v. Stokes
Seeds Ltd. (1992), 11 O.R. (3d) 129, 96 D.L.R. (4th) 129 (C.A.), leave to appeal
to S.C.C. refused [1993] 2 S.C.R. viii, at p. 135 O.R. Yet here we find what I
would consider a minor transgression in the performance of the contract
justifying just that.

[32] Hunter is the seminal decision of the Supreme Court on the subject of
exemption or exception provisions faced by claims of fundamental breach, albeit
that a five-person court divided itself on this subject between reasons
delivered by Dickson C.J.C. and Wilson J. with one judge supporting each, and
McIntyre J. expressing no view on the issue of fundamental breach.

[33] Hunter involved the sale of gear boxes which were serviceable for some time
and then broke down due to design defects [page531] after the contracted
warranty period. The contract excluded statutory warranties and the purchaser
sought to avoid that exclusion by asserting fundamental breach.

[34] Both Dickson C.J.C. and Wilson J. reviewed and recognized the uncertainties
and complexities that have resulted from seeking to use such an undefinable
instrument as fundamental breach to relieve against unfairness.

I am inclined to adopt the course charted by the House of Lords in Photo
Production Ltd. v. Securicor Transport Ltd., [1980] A.C. 827, and to treat
fundamental breach as a matter of contract construction. I do not favour, as
suggested by Wilson J., requiring the court to assess the reasonableness of
enforcing the contract terms after the court has already determined the meaning
of the contract based on ordinary principles of contract interpretation. In my
view, the courts should not disturb the bargain the parties have struck, and I
am inclined to replace the doctrine of fundamental breach with a rule that holds
the parties to the terms of their agreement, provided the agreement is not
unconscionable.

And at p. 462 S.C.R., pp. 341-42 D.L.R.:

In light of the unnecessary complexities the doctrine of fundamental breach has
created, the resulting uncertainty in the law, and the unrefined nature of the
doctrine as a tool for averting unfairness, I am much inclined to lay the
doctrine of fundamental breach to rest, and where necessary and appropriate, to
deal explicitly with unconscionability. In my view, there is much to be gained
by addressing directly the protection of the weak from over-reaching by the
strong, rather than relying on the artificial legal doctrine of "fundamental
breach". There is little value in cloaking the inquiry behind a construction
that takes on its own idiosyncratic traits, sometimes at odds with concerns of
fairness. This is precisely what has happened with the doctrine of fundamental
breach. It is preferable to interpret the terms of the contract, in an attempt
to determine exactly what the parties agreed. If on its true construction the
contract excludes liability for the kind of breach that occurred, the party in
breach will generally be saved from liability. Only where the contract is
unconscionable, as might arise from situations of unequal bargaining power
between the parties, should the courts interfere with agreements the parties
have freely concluded.

[36] Wilson J.'s view is more complex in appearance. She states at pp. 510-11
S.C.R., p. 377 D.L.R.:

Exclusion clauses do not automatically lose their validity in the event of a
fundamental breach by virtue of some hard and fast rule of law. They should be
given their natural and true construction so that the meaning and effect of the
exclusion clause the parties agreed to at the time the contract was entered into
is fully understood and appreciated. But, in my view, the court must still
decide, having ascertained the parties' intention at the time the contract was
made, whether or not to give effect to it in the context of subsequent events
such as a fundamental breach committed by the party seeking its enforcement
through the courts. Whether the courts address this narrowly in terms of
fairness as between the parties (and I believe this has been [page532] a source
of confusion, the parties being, in the absence of inequality of bargaining
power, the best judges of what is fair as between themselves) or on the broader
policy basis of the need for the courts (apart from the interests of the
parties) to balance conflicting values inherent in our contract law (the
approach which I prefer), I believe the result will be the same since the
question essentially is: in the circumstances that have happened should the
court lend its aid to A to hold B to this clause?

[37] She would leave room to relieve on grounds arising out of the breach of the
contract on policy grounds "to balance conflicting values in our contract law".

[38] Wilson J. found there had been no fundamental breach of the contract. The
vendor delivered a product of poor design, but it was the product the buyer
intended to purchase. She states at p. 500 S.C.R., p. 369 D.L.R.:

It seems to me that this exceptional remedy should be available only in
circumstances where the foundation of the contract has been undermined, where
the very thing bargained for has not been provided.

[39] Even if she had found a fundamental breach she would have enforced the
exemption. The following excerpt gives some suggestions as to what she meant by
"policy grounds to balance conflicting values" (pp. 517-18 S.C.R., pp. 381-82
D.L.R.):

Turning to the case at bar, it seems to me that, even if the breach of contract
was a fundamental one, there would be nothing unfair or unreasonable (and even
less so unconscionable, if this is a stricter test) in giving effect to the
exclusion clause. The contract was made between two companies in the commercial
marketplace who are of roughly equal bargaining power. Both are familiar and
experienced with this type of contract.

. . . . .

There is no evidence to suggest that Allis-Chalmers who seeks to rely on the
exclusion clause was guilty of any sharp or unfair dealing. It supplied what was
bargained for (even although it had defects) and its contractual relationship
with Syncrude, which included not only the gears but the entire conveyer system,
continued on after the supply of the gears. It cannot be said, in Lord Diplock's
words, that Syncrude was "deprived of substantially the whole benefit" of the
contract. This is not a case in which the vendor or supplier was seeking to
repudiate almost entirely the burdens of the transaction and invoking the
assistance of the courts to enforce its benefits. There is no abuse of freedom
of contract here.

[40] It isn't necessary to my reasoning to choose between these two approaches.
If it were, I would favour that of Dickson C.J.C. There is no need for an
undefined discretion in the enforceability of exclusion clauses. Contracting
parties, insurers, business persons and litigants are all better served by the
certainty of standards. And it must be kept in mind that this debate is not
about fundamental breach as it may excuse continuing performance under a
contract. As pointed out by Dickson C.J.C. at p. 463 S.C.R., p. 342 D.L.R.,
[page533] that is a distinct subject from the use of fundamental breach to
defeat an exclusion clause.

[41] Turning to the facts of this case, Dickson C.J.C. would not take a moment
to conclude that there was no unconscionability in the terms of this contract.
The liability clause was imposed by statute, and in this case upon knowledgeable
and sophisticated persons. Wilson J. would have looked as well at the outcome,
but surely would have concluded that all policy concerns pointed to enforcement
of a provision born in legislation which itself was driven by policy.

[42] That legislation is the Truck Transportation Act, R.S.O. 1990, c. T.22.
Regulation 1088 thereunder sets forth a lengthy schedule of conditions that are
deemed to be a part of every contract for the carriage for compensation of
household goods. One condition imposes absolute liability on the carrier for
loss or damage to goods accepted for carriage, with some noted exceptions that
have no present relevance.

[43] Condition 9 reads in part:

9. Valuation

Subject to Article 10, the amount of any loss or damage for which the carrier is
liable, whether or not the loss or damage results from negligence of the carrier
or the carrier's employees or agents, shall be the lesser of, . . . [60 cents a
pound]

[44] The policy concerns addressed by this legislation are longstanding and
widespread. For at least 200 years, a carrier of goods has been absolutely
liable at common law for their safekeeping. The policy for this sweeping
liability is summarized by John McNeil, Q.C. in his text Motor Carrier Cargo
Claims, 3rd ed. (Toronto: Carswell, 1997) at p. 3 in these terms:

[T]he cargo owner's separation from his cargo involves relinquishment of any
opportunity to protect it; the carrier's exclusive possession gives the carrier
exclusive access to all evidentiary considerations in the event of a loss; the
ability of the owner to prove a cause of action based on fault would be
completely illusory; and imposing liability without fault on the carrier would
encourage his diligence and care in the safeguard of the cargo.

[45] Eventually it was found that commercial realities required a limit to that
liability. The carrier has no means of knowing the value of the goods and, even
if it did, the cost of insurance for the most valuable of goods in a cargo would
impose prohibitive charges on the consignor of lesser valued goods. Thus
statutes or regulations emerged maintaining the concept of absolute liability
but limiting that liability to a declared value or, more often, to a value
measured by weight. In this fashion the consignor can either insure the goods or
bear the risk of their loss or damage, knowing the value of such goods. The
carrier also bears some risk, which will act [page534] as an incentive to act
prudently, while knowing that the extent of liability is tied to the weight of
the goods being transported.

[46] Provisions similar to those under our Truck Transportation Act are found in
each of the provinces and extend internationally in treaties such as the Warsaw
Convention, 1929, applying in Canada to international carriage by air, and the
Hague-Visby Rules in respect of international carriage by water.

[47] Thus we have a legislative policy that has developed over many years,
permeates all facets of the transportation of goods industry and is based upon a
sensible business and commercial rationale. I see no policy basis for not
applying the limitation provision against the respondents in the present case.
To the contrary, allowing the respondents' claim opens the door to every
imaginable complaint of misfeasance and would undermine the entire structure
built up under this longstanding policy.

[48] In Fraser Jewellers (1982) Ltd. v. Dominion Electric Protection Co. (1997),
34 O.R. (3d) 1, 148 D.L.R. (4th) 496 (C.A.), this court dismissed a claim by a
householder for losses suffered in a robbery allegedly because an alarm company
failed to respond to a signal. The contract contained an exclusion clause and
the court was not persuaded that there were any features of the relationship
between the parties or the contract to justify avoiding the exemption. The case
does not involve a statutory provision, but the policy issue I have been
discussing is aptly expressed by Robins J.A. at p. 12 O.R.:

Having regard to the potential value of property kept on a customer's premises,
and the many ways in which a loss may be incurred, the rationale underlying this
type of limitation clause is apparent and makes sound commercial sense. ADT is
not an insurer and its monitoring fee bears no relationship to the area of risk
and the extent of exposure ordinarily taken into account in the determination of
insurance policy premiums. Limiting liability in this situation is manifestly
reasonable. The clause, in effect, allocates risk in a certain fashion and
alerts the customer to the need to make its own insurance arrangements. ADT has
no control over the value of its customer's inventory and can hardly be
expected, in exchange for a relatively modest annual fee, to insure a jeweller
against negligent acts on the part of its employees up to the value of the
entire jewellery stock whatever that value, from time to time, may be.

[49] The incident that gave rise to the present litigation fits precisely within
the policy and the wording of condition 9 of the regulation. The appellants were
in the course of performing a common carriage and a misadventure occurred which,
at most, could be found to be caused in part by their negligence. It was the
manner of performance, not the failure to perform which was the subject of
complaint. On their part, the householders recognized the burden of risk and
sought out their own insurance, armed [page535] with knowledge of the goods'
value that was essential to that task and not reasonably available to the moving
company. The movers did know how many pounds they were carrying and thus could
readily cover themselves with insurance to meet the statutory limit. In my view,
this was how the regulation was intended to work in facilitating carriage of
goods and it would be totally disruptive of its purpose if carriers are to be
exposed to liability for undetermined amounts whenever, in the trial judge's
words, "it would be unreasonable to enforce [the exemption]" or some
standardless variation on those words.

[50] In direct response to the reasons of Labrosse J.A., I do not agree that the
standard of care is affected by the fact that the cargo was not "ordinary
household goods". Movers should treat all belongings alike. If the goods were of
special value then the consignors should have purchased a corresponding amount
of insurance.

[51] The fulcrum of Labrosse J.A.'s argument seems to be that the respondents
were induced to accept the limited liability by false assurances that their
goods would be secure. I made the point earlier that assurances that the goods
would be kept secure are superfluous in a contract of bailment. That is so
because a carrier's obligation to keep their consignment secure is implicit in
every contract of carriage of goods. The assurances did not need to be made
explicit. Aside from being superfluous, there was nothing false about the
assurances. The overnight storage on the street was not anticipated. It was, at
the highest, a negligent performance of the duty to keep the goods secure.
Finally, there was no inducement because the limitation of liability was
mandated by statute.

[52] I would therefore allow the appeal and dismiss the action, subject to the
claim for $7,089.60, with costs of the appeal to the appellant. I would want to
hear submissions as to the costs of the trial.

[1] HIMEL J.: When Stuart Solway and Gayle Akler planned the move to their new
home, they hired Kennedy Moving Systems to provide moving services and storage.
Unfortunately, after the move, all their household contents were stolen from the
trailer in which they were being stored by Kennedy. The plaintiffs now sue for
damages for loss of their home contents, loss of income, punitive damages and
interest. Their own insurer joins them in the action. The action against Atlas
was discontinued on August 24, 2001. The defendant Kennedy relies on a
limitation of liability clause in a bill of lading signed by the plaintiffs on
moving day.

A. Factual Background

[2] Gayle Akler and Stuart Solway were married in June 1987. They have one child
who was born in 1997. Ms. Akler received a university education in fine arts and
arts, and took courses in marketing, advertising, business management and
strategic planning. From 1981 until 1995, she worked in the advertising field
and moved up the corporate ladder to senior management positions. In 1995, she
started her own creative advertising company, Sparkplug Marketing &
Communications. She carried on that business out of her home. At the same time,
Ms. Akler taught an advertising course part-time at Ryerson University. She also
took courses in woodworking and furniture construction.

[3] Mr. Solway has a Bachelor of Arts degree in Sociology and a Bachelor of
Commerce degree. He furthered his education in marketing and international
business and received his Masters of Business Administration in 1981. He also
took courses in fine arts, photography, film and music. Mr. Solway worked in the
advertising field for different firms as an account manager and then moved to
the area of creative writing. He decided to start up his own business, Pen
Station, in 1993. His business is also operated out of the home. Mr. Solway and
Ms. Akler's financial positions continued to improve over the years.

[4] During their marriage, the plaintiffs did a great deal of travelling. They
travelled throughout Canada, the United States, South America, Europe and
Australia and throughout their travels acquired handmade art and wood artifacts
as well as tapestries. They collected folk art and primitive Canadian furniture.
As well, they enjoyed pottery, rugs, needlepoint, music and books. Their
clothing was professional attire but with a creative flair to fit their
vocation. Some clothing was purchased during their travels.

[5] In June 1997, their son was born. Ms. Akler took a maternity leave for a few
months to be with her son. Recognizing that she could not take on new projects,
she did not approach clients at the time and her company's revenues fell from
March 1997 until the fall of 1997.

[6] In September, Ms. Akler hired a full-time nanny and returned to work. She
made presentations on projects and retained her husband's company to provide
writing and creative work.

[7] Prior to having a child, the parties lived at 304 Wychwood Avenue in
Toronto. In 1994, they decided to move to 123 Colin Ave. They hired Kennedy
Movers to do the move. They found its principal, Nigel Coffen, to be very
professional and helpful. The move went well. Only one thing was damaged and it
was repaired and the cost covered by Kennedy. The contents of the house had to
be stored for one week. Ms. Akler made the arrangements for the storage to be in
a trailer owned by Kennedy. There were no problems with the move.

[8] After they had a child, and hired a full-time nanny, and with both parties
working out of their home, the Colin Ave. home became crowded. They decided to
look for a larger home in the same neighbourhood. In October 1998, they bought a
house at 57 Lascelles Blvd., and sold Colin Avenue in November 1998.

[9] Ms. Akler was responsible for making the move arrangements. The closing
dates of the transactions were both scheduled for February 1, 1999. Because they
planned to do some renovations in the new house, the parties arranged to stay at
Mr. Solway's mother's house and have their belongings placed in storage for
approximately two weeks.

[10] Ms. Akler contacted Kennedy Movers because of her satisfaction with their
performance on the earlier move. She left a message for Nigel Coffen and he had
one of his staff, Greg Peterson call her back. They arranged to meet and he came
to the house in late November. At the meeting, he provided some corporate
literature and reviewed the contents of the house. According to the plaintiffs,
he commented that they had a number of nice antiques and a lot of furniture. Mr.
Peterson does not recall meeting with the plaintiffs when he came to the house
initially to assess the contents but says he was let into the house by a
housekeeper. He spent the time reviewing each room and noting the amount of
furniture to determine the size of truck and the number of movers that would be
needed and to quote a price. When Mr. Peterson spoke to Ms. Akler on the
telephone, he says she requested short-term storage at as economical a price as
possible. He claims he reviewed the options of warehouse and trailer storage but
focused on trailer storage because it was for such a short term.

[11] Ms. Akler also spoke with a competitor, Movemaster, and received a
quotation. However, they decided to go with Kennedy once they negotiated a
better price, and when Kennedy agreed to provide boxes at no cost, Ms. Akler
testified that the affiliation of Kennedy with Atlas Van Lines, which was a
household name, gave them comfort and assurance.

[12] Ms. Akler says that during their meeting, Mr. Peterson talked of the
storage facility as being modern, with 24-hour security and climate control. She
wanted to ensure that her articles were safe. Mr. Peterson discussed the
question of insurance and advised it could be arranged either through Kennedy or
through their own insurer. In his testimony, Mr. Peterson stated that insurance
is only available with storage in the Kennedy premises and that trailer storage
requires self-insurance. The plaintiffs decided to arrange insurance with their
own insurer. Ms. Akler called their own insurance broker, advised that they were
moving to a new and bigger house and that they required insurance during the
move and for their contents once they were in the new house. Ms. Akler discussed
the value at which the goods should be insured for her house and established a
replacement cost of $170,200. That was the estimate her broker came up with
based upon the size of the house.

[13] Although Kennedy was to provide boxes for packing, Ms. Akler says she had
difficulty obtaining the boxes, and when she called Mr. Peterson, he was
belligerent with her. By January 20, the plaintiffs were becoming concerned. Mr.
Solway even called Movemaster to see if they could do the move on short notice.
However, he then spoke with Nigel Coffen, complained about Mr. Peterson and
demanded that the boxes be provided by the next day.

[14] As a result of the call, the parties were satisfied that the company was
taking them seriously. The boxes were delivered the next day. Nigel Coffen says
he recalls that he received a telephone call from Mr. Solway who was concerned
about the timing of the delivery of the cartons. He does not recall discussing
any problems concerning Mr. Peterson nor does he recall discussing security
measures that would be in place for their goods.

[15] February 1, 1999 was moving day. Four movers arrived. While they were
packing the truck, Ms. Akler questioned them and was told that the household
contents would be stored on the truck for the two-week period. This surprised
Ms. Akler as, based on what she was told and the literature she received, she
says she believed that the goods would be stored in a temperature controlled
area with 24-hour security in the Kennedy premises. However, she felt she had no
choice and the move proceeded. A few items were delivered to the new home but
the bulk of the contents were taken to storage. Ms. Akler testified that she had
not been advised in advance that she would be required to pay the movers on the
day of the move. After some discussion, she provided a cheque at the agreed upon
price. She signed a document, a bill of lading, which acknowledged the time
spent and the rate. It also contained a clause which read as follows:

5. Unless value is declared and additional protection is requested, carrier's
liability is limited to $0.60 per pound per article including contents, whether
such loss or damage is arising out of storage, transportation, packing,
unpacking or handling. If additional protection is requested, the carrier's
liability is limited in the case of loss or damage of the entire shipment to the
amount of the declared value. In the case of partial loss or damage, it will be
limited to the portion of such loss and damage which such declared value bears
to the true market value of the entire shipment.

[16] After the move, Ms. Akler received a telephone call from Mr. Peterson who
requested more money and she paid him an additional $421. When the renovation
did not progress as quickly as was hoped, she called Kennedy to arrange to
extend the storage.

[17] On February 11, 1999, Ms. Akler received a telephone call from the office
manager at Kennedy telling her that the trailer where the goods had been stored
had been stolen. Ms. Akler said that she was in shock. Her husband called Nigel
Coffen and was told that two of ten trucks had been stolen from the yard.

[18] Ms. Akler and Mr. Solway contacted their insurance broker who arranged for
them to meet with Paul Gorjip, the insurance adjuster. They gave him a detailed
proof of loss form and, ultimately, he recommended that the plaintiffs receive
the full reserve of $170,200, the limit of the coverage.

[19] Ms. Akler described how she felt after learning of the theft. She said she
was completely overwhelmed as virtually everything they owned was gone,
including items of sentimental value. She said she felt violated. The insurance
adjuster described them as visibly upset and scattered in their thoughts.

[20] Ms. Akler kept a diary and referred to it in her evidence in order to
refresh her memory. It recorded certain events after February 11, 1999. Although
the truck was later located, none of the household contents were recovered. For
the next while, she spent hours trying to do an inventory of articles lost and
obtain the replacement values for them. These lists were completed room by room.
They also had to replace a number of items in order to live in the house.

[21] On February 18, Ms. Akler learned that the truck in which her belongings
had been stored had been left on the street near Kennedy's premises because of
snow in the parking lot of the mover's business. Apparently, Greg Coffen, the
Operations Manager, had made the decision to move the trailer to the street so
the parking area of the Kennedy premises could be ploughed after a snowfall.

[22] Mr. Gorjip attended at the Kennedy premises after the theft. He observed
there was no fencing or secure compound. There was no evidence of surveillance
or security equipment. Pictures taken of the scene at the time show trucks
parked behind Kennedy Moving with no fence or security in sight.

[23] Kennedy Moving Systems is a family business which started in 1972. In 1982,
Nigel Coffen and his brother Gregory Coffen joined their father in the business.
The company became an agent for Atlas Van Lines in 1984. Nigel and Greg grew up
in the business performing all kinds of jobs. Nigel was a helper, packer,
salesman, warehouseman and driver. Greg also worked in a number of capacities as
he, too, learned the business. After some years, Nigel became General Manager,
responsible for the overall operation of the company and assisting in sales and
marketing. Greg became Operations Manager which included responsibility for the
warehouse operations. When they first took over the business, they acquired
Davis Moving & Storage Inc., an existing moving company licensed to transport
household goods within the province. It was a lengthy procedure obtaining the
operating licence. They decided to use Kennedy Moving Systems as the name since
that was what the family business had been called.

[24] When Ms. Akler and Mr. Solway retained Kennedy to do their move, the
premises of Kennedy Moving Systems were located at 5960 Wallace Street,
Mississauga, Ontario. This was a freestanding building in a highly
industrialized and commercial area near Highway 401 and Hurontario Street. The
building had its own yard and parking facilities. The company offered primary
household moving including packing and storage for local, long distance and
international relocations. Its affiliation with Atlas meant that its trucks had
the Atlas logo but, in reality, Atlas was only involved in moves of 150 miles or
more. Moves less than that distance were done by individual carriers using their
own paperwork.

[25] Kennedy offered a variety of equipment depending on the size of the move
and packing, moving and storage services. Storage consisted of either storage in
the building or trailer storage where goods would be maintained in the trailer
and the trailer would be parked in the compound at 5960 Wallace Street.

[26] Nigel Coffen testified that it was Kennedy's preference to sell storage
services in their own building rather than on a trailer as they were paying rent
for the facilities and trailer storage tied up trucks. However, if the storage
was for a short period of time, it would be done in the trailer with the trailer
kept at the back of the Kennedy premises, taken off the truck and locked and
secured in the yard. The area around the premises was wide open modern space
surrounded by commercial properties.

[27] It was Greg Coffen's responsibility as Operations Manager to ensure that
the trailers were well protected by securing them with a locking system. On
February 10, 1999, Greg Coffen moved the trailer containing the Akler/Solway
belongings out onto the street in front of the Kennedy building so a contractor
could clear the yard of snow. According to Nigel Coffen, it was Greg's practice
to drop the trailer in front of the building, put on locks, and move it back to
the yard once the lot was cleared. There was no night watchman monitoring the
trailer while it was on the street.

[28] On the morning of February 11, Greg Coffen discovered that the trailer was
missing and contacted the police and the insurance company. The trailer was
eventually recovered hooked up to a tractor that did not belong to Kennedy but
was also stolen. The entire contents were missing.

[29] Ms. Akler provided evidence of her income at the time of the loss and
financial statements of her company for the preceding years. She commented that
revenues of her company dropped for the 1998-1999 year which was the year of the
loss. The financial year end of the company was July 31, 1999. Ms. Akler
explained that they dropped in that fiscal year because she could not conduct
business while she was consumed with the theft and replacing articles in her
house. For example, Ms. Akler testified that she was told of a project that had
to be done over a weekend in order to secure a larger project. Ms. Akler was
unable to do the proposal and had to turn it down because she was too busy
dealing with the theft. She spent a great deal of time preparing the schedule of
proof of loss to get reimbursement from the insurance company. While the
insurance company did not require verification of replacement cost of each item,
Ms. Akler was careful to contact stores to determine accurate costs. As well,
during that fiscal year, some time was spent selling the Colin Ave. house,
buying the Lascelles house and packing up the house for the move. Sparkplug
claims approximately $60,000 for the decline in revenues due to the theft.

[30] Sparkplug's claim for loss of income was supported by the evidence of Rubin
Cohen, the company accountant. He had prepared the corporate financial
statements which were produced as evidence at trial. He outlined his
observations and commented upon a chart prepared by Ms. Akler summarizing
information from the financial statements on revenue, expenses and net income.
He noted the decrease in income for the 1998-99 fiscal year in income as
compared to the previous three years and the two subsequent years. For the years
1995 to 2001, the total average income was $101,025. For 1998-99, the total
income was $36,599.

[31] Mr. Cohen is not a forensic account[ant] and could not, of course, comment
on the reasons for the decrease in income for the 1998-99 fiscal year. He knew
Ms. Akler had a child in 1997; he did not know how many hours she worked nor
could he say what factor the economy played in the income of Sparkplug for the
1998-99 fiscal year.

[32] Ms. Akler said that while she and her husband received moneys through their
own insurer, that amount was limited to $170,200. She also testified that
despite the provision in para. 5, they were not paid 60 cents per pound for
articles lost by Kennedy. They have never received any compensation from
Kennedy.

[33] Ms. Akler testified that she was primarily responsible for itemizing the
contents of the house. That process went on for months. It involved listing
items, obtaining replacement costs and then shopping for necessary items in the
house. The couple decided that Mr. Solway would focus on his work while Ms.
Akler would deal with the after-effects of the theft. He helped with itemizing
articles from his office and checking what she noted. They made joint decisions
about purchases.

[34] Mr. Solway did not keep track of the number of hours spent on theft-related
matters. His estimate of time spent was five to eight hours in the first two
weeks, two hours a day in the next month and one to two hours a day during the
next two months. That would be a total of 130 to 160 hours or two to three
weeks' work. Witnesses were called to corroborate the plaintiffs' assertion that
business was lost by Pen Station as a result of the time spent on theft-related
matters by Mr. Solway. Fransi Weinstein testified that Stuart Solway was
approached in the spring of 1999 by her company to do work that would have
generated between $10,000 and $25,000. Mr. Solway claimed he was unable to
perform the job because of his commitments at home to deal with matters
following the theft. Richard Toker, who had been Vice President of
Communications at Bim Communications, an advertising company involved in direct
marketing, knew of Mr. Solway as a skilled copywriter and attempted to hire him
to do work on a direct mail package including a magazine, advertisement and
website. Mr. Solway declined because he had to deal with theft-related matters.
That contract would have provided $2,500 to Pen Station. Stephen Tannenbaum, a
freelance copywriter in advertising, testified that he wanted to hire Mr. Solway
in the spring of 1999 to work on a project that could have resulted in an $8,000
fee. Mr. Solway advised him that he was not available. Finally, Janet Rous
wanted to hire Mr. Solway for some advice and would have paid him $400. He was
unable to take the job because of commitments regarding the theft.

[35] Ms. Akler said that while she and her husband received moneys through their
own insurer, that amount was limited to $170,200. She also testified that
despite the provision in para. 5 of the bill of lading, they were not paid 60
cents per pound for articles lost by Kennedy. They have never received any
compensation from Kennedy.

[36] The parties became concerned that they were not given sufficient funds to
replace their household items. Ms. Akler was under stress, was unable to sleep
and feeling quite depressed.

[37] Even three years later, the plaintiffs say their house is half furnished.
They have not replaced books, records, compact discs, clothing and many other
possessions. They have not, for example, bought a couch for their living room.
They say they do not have sufficient money to replace their things.

[38] Ms. Akler and Mr. Solway commented upon the 65-page list of contents and
articles of particular value to them. They included pieces of art, wedding
photographs, antique furniture, needlepoints, carvings, records, compact disks
and books. They said that their belongings had been in very good condition and
that Ms. Akler threw out things that were not in good shape. Some additions were
made to the list of stolen articles as the plaintiffs remembered what was
missing. The final replacement value estimated was $750,000. Because they had
valuable things, the plaintiffs say they took special care to hire a moving
company that would provide security.

[39] A significant issue in this case is the nature of representations made to
the plaintiffs by Kennedy prior to them agreeing to hire Kennedy to do the move
and storage. The plaintiffs led evidence of Ren and Elaine Bertrand, another
couple who hired Kennedy in February 1999 to move their belongings to their new
house and to store their contents for ten days. The Bertrands said they hired
Kennedy because they had received a flyer from them and because they were
associated with Atlas Moving Company which they had used when they moved from
Montreal to Toronto some years earlier. They contacted Kennedy and Greg Peterson
came to their home twice. On the first occasion, he provided reference letters
and literature from Kennedy including hints about moving. He looked around and
did an analysis of their contents and told them about the services available.
They negotiated a price on the telephone and then he faxed to them a proposal
for moving which outlined the services and a quotation of costs. The written
materials they received were similar to those received by the plaintiffs. Like
the plaintiffs, they found Mr. Peterson to be very professional. Neither Ms.
Akler nor Mr. Bertrand was told that their articles would be stored on the same
trailer as those of another family.

[40] Because the Bertrands required storage of their belongings for only ten
days, they understood that they would be kept on the truck. However, Mr.
Bertrand says he was told they would be kept safe in a trailer which would be in
a fenced in area of Kennedy's premises, with surveillance and with someone on
site 24 hours a day. Mr. Bertrand says this was reiterated to him at both
meetings with Mr. Peterson, and Mrs. Bertrand confirms that, at the initial
meeting with Mr. Peterson they discussed the storage facilities and that where
storage was for a short time, the goods would be maintained on the truck. She
says they were assured the goods would be in a fenced-in area, with security
cameras and a guard present 24 hours per day. She says they hired Kennedy to do
the move because Mr. Peterson made them feel comfortable, he was professional
and they had a sense their goods would be secure. Mr. Peterson denies telling
the Bertrands that their articles would be kept on a trailer in a fenced-in
compound monitored 24 [hours] a day.

[41] Mr. Bertrand says he was told that Kennedy would be responsible for loss at
60 cents per pound or they could obtain further insurance from Kennedy or
through their own insurer. The Bertrands talked to their own insurer and
arranged that they would be covered.

[42] On February 5, 1999, the day of their move, Mr. and Mrs. Bertrand were
surprised to learn that the movers arrived with a trailer that had someone
else's belongings already on the truck. There was an argument about this with
the driver but Mr. Bertrand felt he had no choice at that point but to go along
with the arrangement. When the movers packed the truck, they found they did not
have enough room and had to put some of the Bertrands' articles on a second
truck.

[43] Like Ms. Akler, Mr. Bertrand was required to pay for the move on moving day
although he had not been told beforehand. The Bertrands also signed a bill of
lading on the day of the move. It contained the same limitation of liability
clause.

[44] Mr. Bertrand received a message at work on February 11, 1999 from the
office manager at Kennedy that the truck in which his goods were stored had been
stolen. He later learned the truck had been found and that a few of his articles
were left in the truck. He went to the Kennedy premises to speak to the owner
and, while there, observed the set-up. He was never told where the truck had
been parked and how it was stolen. Through his insurer, he later learned that
the truck had been parked on the street. He has never received any reimbursement
from Kennedy. However, the Bertrands were satisfied with the insurance coverage
of their losses.

[45] Mr. and Mrs. Bertrand have litigation pending against Kennedy which was
instigated by their insurance company. The Bertrands, like the plaintiffs,
acknowledge that they were aware of the limitation of liability clause providing
for coverage of 60 cents per pound and the need to arrange their own insurance
coverage.

B. The Positions of the Parties

[46] The plaintiffs take the position that they are entitled to damages for
breach of contract to compensate them for the loss of their home contents, loss
of income, punitive damages and interest. They argue that the defendant cannot
rely on the limitation of liability clause in the bill of lading signed on
February 1, 1999 by Ms. Akler. That limitation clause provided that the
defendant was responsible to compensate the plaintiff for losses at 60 cents per
pound. Given the weight of the goods being stored, that would result in
$7,089.60 owing to the plaintiffs. The plaintiffs take the position that as a
result of negligent misrepresentation made by the defendant, the plaintiffs
entered into the contract believing that the defendant would provide storage of
their goods in the Kennedy premises rather than in a trailer and that they would
be monitored on a 24-hour basis.

[47] The defendant argues that the plaintiffs were advised to obtain their own
insurance for the move and that they are confined to recovery from their own
insurance company for the losses. They submit that the limitation of liability
clause in the agreement should be upheld in favour of the defendant.

C. Analysis and the Law

[48] The parties entered into a contract for moving and storage services. A
theft took place on February 11, 1999 and the plaintiffs' belongings, which were
being stored by the defendant, were stolen. The question is whether the
defendant is liable for these acts of a third party.

[49] The defence takes the position that there is a limitation of liability
provision in the contract which should be enforced against the plaintiffs.

[50] In a case similar in its factual context, Rose v. Borisko Bros. Ltd.
(1981), 33 O.R. (2d) 685, 125 D.L.R. (3d) 67, affirmed at (1983), 41 O.R. (2d)
606n, 147 D.L.R. (3d) 191n (C.A.), the Ontario Court of Appeal upheld the High
Court decision which found that the contract made by the plaintiff for storage
in climate-controlled premises equipped with a modern sprinkler system was
breached when the defendant placed the goods which included valuable antiques in
premises without heat or sprinklers and they were destroyed by fire. The court
held that the plaintiffs were not precluded from compensation by a limitation
clause in that there had been a fundamental breach of contract since the
facilities in which the goods were stored were so fundamentally different from
those provided under the agreement. The court also held that, alternatively,
there was liability in that the representations made by the defendant amounted
to a collateral warranty which induced the plaintiffs to enter the contract and
overrode the exculpatory clause.

[51] Similarly, in Davidson v. Three Spruces Realty Ltd., [1977] 6 W.W.R. 460,
79 D.L.R. (3d) 481 (B.C.S.C.), the plaintiffs were given express assurances of
the safety of their valuables being stored and the court found there had been a
fundamental breach of contract because the defendant took no precautions for the
safety of the items. Such conduct was not protected by the limitation clause.

[52] In Drake v. Bekins Moving & Storage Co. Ltd., [1982] 6 W.W.R. 640 (B.C. Co.
Ct.), the court held that it was fundamental to the contract that the goods be
safely maintained and that it would be inequitable to uphold a limitation of
liability clause.

[53] The defence argues that the concept of fundamental breach has been
virtually eliminated in Canada and the plaintiffs' authorities are suspect in
light of Hunter Engineering Co. v. Syncrude Canada Ltd., [1989] 1 S.C.R. 426, 57
D.L.R. (4th) 321. There, the court upheld a limitation of warranty clause as
enforceable but commented that such clauses may not be enforceable on equitable
grounds. Chief Justice Dickson wrote at pp. 455-56 S.C.R., p. 337 D.L.R.: "I am
inclined to replace the doctrine of fundamental breach with a rule that holds
the parties to the terms of their agreement, provided the agreement is not
unconscionable." In a thorough analysis of the doctrine of fundamental breach,
the court commented on the shortcomings of the doctrine as a way of
circumventing the effects of unfair contracts. "In light of the unnecessary
complexities the doctrine of fundamental breach has created, the resulting
uncertainty in the law, and the unrefined nature of the doctrine as a tool for
averting unfairness, I am much inclined to lay the doctrine of fundamental
breach to rest, and where necessary and appropriate to deal explicitly with
unconscionability" (at p. 462 S.C.R., p. 341 D.L.R.). In a separate judgment
written by Wilson J., she provided her view of the role of the courts in
deciding whether to enforce an exclusion clause in the event of fundamental
breach. Where the contractual term is unreasonable and the unreasonableness
stems from inequality of bargaining power, equitable principles dictate whether
the exclusion clause should be enforced.

[54] The defence argues that whether the approach taken is that of Chief Justice
Dickson on the basis of "unconscionability" or that of Justice Wilson which
supported the continuation of the concept of fundamental breach and that courts
have a role in determining that an exclusion clause is ineffective where it is
appropriate to do so, the plaintiff should not succeed in having the limitation
clause set aside where parties of equal bargaining power enter into contractual
terms.

[55] In his text, The Law of Contract in Canada, 3rd ed. (Toronto: Carswell,
1994), at p. 599, G.H.L. Fridman takes the view that the Ontario Court of Appeal
in Kordas v. Stokes Seeds Ltd. (1992), 11 O.R. (3d) 129, 96 D.L.R. (4th) 129
(C.A.) seems to have adopted Justice Dickson's approach that there is not much
life left in the concept of fundamental breach.

[56] The defence also argues that cases decided before Hunter Engineering may be
overruled on the approach to fundamental breach. In Punch v. Savoy's Jewellers
Ltd. (1986), 54 O.R. (2d) 383, 26 D.L.R. (4th) 546 (C.A.), the court held that a
broadly worded limitation clause which included loss through "negligence or
otherwise" does not extend to covering loss that may be caused by theft of an
employee of the carrier. The court applied the doctrine of fundamental breach of
contract and found that the clause did not apply.

[57] While that analysis may not be supported in light of Hunter, the facts are
also distinguishable from the case at bar. The real question is whether the
limitation of liability clause upon which the defence seeks to rely is
unconscionable or whether it would be unreasonable to enforce it: Carleton
Condominium Corp. No. 32 v. Camdev Corp., [1999] O.J. No. 3448 (C.C.); Fraser
Jewellers (1982) Ltd. v. Dominion Electric Protection Co. (1997), 34 O.R. (3d)
1, 148 D.L.R. (4th) 496 (C.A.).

[58] The application of the impact of fundamental breach to motor carrier cargo
claims is discussed in John McNeil's text, Motor Carrier Cargo Claims, 3rd ed.
(Scarborough: Carswell, 1997). The author reviewed several carrier cases where
the courts have held that fundamental breach does not apply to a limitation of
liability clause contained in a bill of lading which contemplates the
possibility of loss of articles and a method to measure their value: "Thus, loss
or damage to the cargo itself cannot be a fundamental breach of contract where
the contract itself provides for a measure of loss when such an eventuality
occurs. The cargo claimant is more apt to have a successful argument against the
carrier if its action can be framed as a case of deviation from the contract,
remembering that, as has been discussed earlier, the concept of deviation
relates to the manner of performance of the contract, and is not, it is
submitted, measured by the result of performance" (at p. 121). In a case where
the loss which occurred is the kind of loss contemplated by the limitation
clause, a limitation clause by which the parties were bound by the statute will
be held to survive a breach of contract: Bill Le Boeuf Jewellers of Barrie Ltd.
v. B.D.C. Ltd., [1982] O.J. No. 1626 (C.A.).

[59] It is argued that, even on those grounds, it would be unconscionable and
unreasonable not to strike down the limitation of liability clause in this case.
The plaintiffs cite two cases of the English Court of Appeal as authority in
support of their interpretation of the limitation of liability clause. In J.
Evans & Son (Portsmouth) Ltd. v. Andrea Merzario Ltd., [1976] 2 All E.R. 930,
120 Sol. Jo. 734 (C.A.), where the plaintiff received assurances about shipping
of cargo, the court found there was a collateral warranty by the defendant
shipper such that it could not rely on its limitation of liability clause. The
court looked at the entire contract, the written agreement and the oral
assurances and found a failure to perform according to the oral assurances
given. Lord Denning struck down the limitation clause and held that the
defendants could not rely on the exemption clause in the printed conditions
where there had been a breach of an oral promise.

[60] Similarly, in an earlier decision, Mendelssohn v. Normand Ltd., [1969] 2
All E.R. 1215, [1970] 1 Q.B. 177 (C.A.), the Court of Appeal struck down an
exception clause where the defendant made an oral promise to lock the
plaintiff's car and the plaintiff's luggage was stolen. The court cited a number
of authorities which supported the proposition that an oral promise or
representation of fact takes precedence over a written condition because "the
oral promise or representation has a decisive influence on the transaction -- it
is the very thing which induces the other to contract -- and it would be unjust
to allow the maker to go back on it. The printed condition is rejected because
it is repugnant to the express oral promise or representation" (at p. 1218 All
E.R.).

[61] The effect of a limitation of liability clause in a bill of lading was
discussed in Fleet Express Lines Ltd. v. Continental Can Co. of Canada Ltd.,
[1969] 2 O.R. 97, 4 D.L.R. (3d) 466 (H.C.J.), where the court held that the bill
of lading did not comprise the entire agreement and that the contract was
intended to be the verbal terms agreed upon together with the conditions on the
bill of lading.

[62] The defence has cited authority on the proof of evidence rule that if the
language of the written contract is clear and unambiguous then no extrinsic oral
evidence may be admitted to alter, vary, or interpret in any way the words used
in the writing: see G.H.L. Fridman, supra, at p. 461. Relying upon Bauer v. Bank
of Montreal, [1980] 2 S.C.R. 102, 110 D.L.R. (3d) 424, the defence takes the
position that a collateral oral agreement may not stand if it is inconsistent
with the written agreement.

[63] In the case at bar, the plaintiffs argue that there was an oral statement
made regarding the type of security for storage of their belongings and that
should oust the limitation of liability clause. The defence argues that there is
nothing in the written agreement on security and that does not form part of the
contract.

[64] The plaintiffs argue in any event that the limitation of liability clause
relied upon by the defendant was not sufficiently clear to exclude consequential
damages for loss of profits: see Monta Arbre Farms Inc. v. Inter-Traffic (1983)
Ltd. (1989), 71 O.R. (2d) 182, 64 D.L.R. (4th) 533 (C.A.); Cathcart Inspection
Services Ltd. v. Purolator Courier Ltd. (1981), 34 O.R. (2d) 187, 128 D.L.R.
(3d) 227 (H.C.). In the case at bar, the plaintiffs submit that the limitation
clause had no express exclusion from consequential damages and that failure of
delivery of their belongings would result in loss of income as a natural
consequence of the breach.

[65] The defence takes the position that it is the two corporate entities only
which have made the claim for loss of income and that neither were parties to
the agreement with the defendant. There is no evidence the defendants knew of
their existence and a loss of profits claim would not have been foreseeable.

[66] In B.D.C. Ltd. v. Hofstrand Farms Ltd., [1986] 1 S.C.R. 228, 26 D.L.R.
(4th) 1, the facts were that a courier, unaware of the contents of an envelope,
failed to deliver it on time. The third party refused to complete the
transaction. The action was brought against the Crown and the courier. The court
held there was no duty of care owed to the plaintiff.

[67] Estey J., writing for the majority, reviewed the principles applicable in
economic loss cases and traced the growth of obligation in the law of negligence
as to the nature of the interests protected and the range of potential
plaintiffs. He referred to Donaghue v. Stevenson, [1932] A.C. 562, which
involved physical harm caused by a negligently made product to a plaintiff not
in privity of contract with the defendant manufacturer. In Hedley Byrne & Co.
Ltd. v. Heller & Partners Ltd., [1963] 2 All E.R. 575, [1964] A.C. 465 (H.L.)
the court dealt with a loss caused by a negligently made statement where the
loss was purely economic. Estey J. commented upon the expansion of the
principles concerning tort liability but recognized that the courts have
remained aware of the need for reasonable limitations.

[68] In the case of B.D.C., the court found that there was careless performance
of an undertaking by contract to perform services in a timely way but, because
the courier had no knowledge of the existence of the plaintiff, nor of a class
of persons whose interests depended upon timely transmission of the envelope,
held that "[t]here was therefore no actual or constructive knowledge in the
courier that the rights of a third party could in any way be affected by the
transmission or lack of transmission of the envelope in question . . .": at p.
241 S.C.R. Thus, the requirements of proximity contained in principles set out
in Hedley Byrne were not met. The court also went on to find that the damages
were too remote and were not recoverable.

[69] Unless it can be shown that the defendant had actual knowledge of the
special circumstances such that a reasonable person in the position of the
courier would know that a failure to effect timely delivery would result in
consequential lost profits, the defendant will not be liable: "It is clear
therefore (there being no such communication), that if the parties had been in a
relationship of contractual privity, the losses complained of would not have
been foreseeable. They are no more foreseeable because the respondent sued in
tort": at p. 246 S.C.R. In Thode Construction Ltd. v. Ross Brothers Cartage Ltd.
(1959), 20 D.L.R. (2d) 227, [1960] I.L.R. 1-347 (Sask. C.A.), the court reviewed
the principle in Hadley v. Baxendale that a plaintiff is entitled to the damages
which may fairly and reasonably be construed as naturally arising from the
breach of contract according to the usual course of things" (at p. 231 D.L.R.),
and held that courts will be reluctant to allow loss of profits fo r failure by
a courier to deliver goods since the matter depends on knowledge, actual or
imputed, of the carrier and special circumstances known only to the shipper,
cannot be attributed to the carrier.

[70] Whether the corporation as employer can claim loss of profits for loss of
services of its employee was discussed in Genereux v. Peterson Howell & Heather
(Can.) Ltd. (1972), [1973] 2 O.R. 558, 34 D.L.R. (3d) 614 (C.A.). The court
outlined the nature of an action per quod servitium amisit which is based upon
interference with the services given to a master by the servant. No extension of
the basis of assessing the amount recoverable beyond the actual value of the
services lost has been permitted. The loss of profit due to the interruption or
interference of the servant's services is beyond the limits of foreseeability.

[71] In Vaccaro v. Giruzzi (1992), 93 D.L.R. (4th) 180 (Ont. Gen. Div.), a
corporate plaintiff sued for loss of the services of an individual plaintiff for
damages resulting from injuries sustained in a motor vehicle accident. The
individual plaintiff was the sole shareholder of the company. The court allowed
recovery of damages for the cost of services of a substitute of the injured
servant but did not allow loss of profits due to the interruption of or
interference with the servant's services.

D. Findings

[72] Both individual plaintiffs are obviously intelligent and reasonably
sophisticated business people. They have worked hard and had acquired
possessions which they had chosen carefully during their travels, at auctions
and through their hobbies.

[73] On their move from Wychwood to Colin Avenue in 1994, they arranged storage
with Kennedy knowing that their goods would be stored on the truck for a
one-week period. They were aware that they had to obtain their own insurance
coverage for loss or damage to the goods.

[74] When the plaintiffs made the moving arrangements in late 1998, they
obtained two quotations but decided on Kennedy because it seemed to be so
professional and because they had a good experience with Kennedy in the past.
Ms. Akler says she did not tell anyone at Kennedy the value of their goods but
emphasized the importance of certain items. She thought that this time storage
would be in the warehouse for the two-week period. She believed the goods would
be in a controlled area and under 24-hour surveillance. She based this on the
literature received from Kennedy which discusses storage. However, that
reference is to storage in the Kennedy facilities and not on a trailer. Mr.
Solway says he received assurances from Nigel Coffen that their goods would be
secure when they spoke by telephone on January 20. The contents of that
conversation are disputed by the parties. However, I find that although they may
not have discussed specifically where the articles would be stored, Mr. Coffen,
in trying to retain the deal with Ms. Akler and Mr. Solway, provided them with
assurances in order to preserve their confidence.

[75] Ms. Akler knew that the plaintiffs had to arrange their own insurance or
buy special insurance from Kennedy. They decided to use their own insurer and
relied on their own broker to value their goods and put adequate insurance in
place. Ms. Akler read the bill of lading on the date of the move and says she
understood it. The limitation clause in para. 5 was not a surprise to her since
she knew she had to obtain coverage for the difference in the amount paid under
the limitation of liability provision and the value of the goods. However, she
says she signed this because she believed her property was secure. She admits
that she signed, read and understood what she signed. While she was surprised to
learn on moving day that her goods were to be stored on the trailer, she felt
she had no choice. She was told that, for a short period of time, the goods
would be kept on the truck and that it would be locked and on the Kennedy
property. Based on what she was told and the literature received earlier from
Kennedy, she believed that the goods would be stored securely in the warehouse.

[76] In reviewing the literature sent by Kennedy to prospective customers, it is
clear that there is reference to storage in a climate controlled and monitored
premises. There is no reference to storage on a trailer in the materials
distributed.

[77] While the confidential moving proposal sheet sent to Ms. Akler by Kennedy
makes reference to storage, it did not specify where. It is noted on internal
documents in Kennedy's file that storage was to be for two weeks on the trailer.
Storage in the Kennedy premises would have involved two moves of loading and
unloading and was not contemplated for such a short-term arrangement. The cost
of warehouse storage on pallets would have been at least double the cost of the
price quoted.

[78] In that Ms. Akler and Mr. Solway were experienced in business, it is my
view that they knew or ought to have known that their goods would be stored on
the trailer. In fact, that was the type of storage they had arranged on the
previous move. Moreover, given the cost of storage ($150 per week), it was
unreasonable to expect that Kennedy was providing storage in their
climate-controlled facility at such a low price. Finally, there is a copy of the
Confidential Moving Proposal which the plaintiffs say they received from Kennedy
and upon which Ms. Akler made handwritten notes. One notation made by her makes
reference to "trailer storage" on the document faxed to her on January 15, 1999.
I make this finding even though trailer storage was not specified to the
plaintiffs in their meeting, in the correspondence containing the quotation or
in their telephone conversations with Kennedy.

[79] In reaching these conclusions, I have considered the evidence of Mr.
Peterson, whose memory I found to be selective. He testified about his usual
practice and his "sales pitch" with customers while working for Kennedy.
However, he was not able to remember a number of things that Ms. Akler and Mr.
Solway and the Bertrands could recollect, most notably, with regard to the
security of the storage facilities. On the other hand, he purported to recall
certain events which were not recorded in the documentation, such as his advice
to Ms. Akler about the availability of two types of storage or her selection of
trailer storage. He also claims to have hand delivered to Ms. Akler a document
with trailer storage specified which the defendant never produced. His memory of
events differed in some areas from his recollection at the examination for
discovery held in July 2000.

[80] He also acknowledged that he would see three to six customers a day and
that he dealt with a number of potential clients and could not recall specific
conversations. In summary, I accepted his evidence as to general practices or
procedure but did not find his evidence to be reliable when it came to a
specific recollection of events in this case.

[81] Accordingly, I find that the plaintiffs arranged to have their goods stored
in the trailer for the two-week period. I do, however, find as fact that Ms.
Akler and Mr. [Solway] were given assurances that their goods would be secure.
They knew that Kennedy was affiliated with Atlas. Unbeknownst to them, Atlas was
not involved in short-distance moves yet it permitted its name to be on the
moving truck and on the written materials sent to the client. It was reasonable
for the parties to believe that Kennedy's affiliation with Atlas gave the
company certain professionalism and credibility. Furthermore, even Mr. Peterson,
the salesman for Kennedy, says they discussed the attributes of trailer storage
because it involved only one move of the goods and that would reduce cost and
lessen the likelihood of damage. He says he described how their goods would be
secure by being parked at Kennedy's facility, with landing gear put down, and
all doors locked. Even accepting that there were no gates, no surveillance and
no night watchman, there was the uncontradicted representation that the trailer
would be parked on its parking lot with the landing gear down, the trailer
removed from the truck, and the doors locked.

[82] Both Nigel and Greg Coffen testified that Kennedy had never had a theft
either before February 11, 1999 or since that date. However, given their
responsibility for important and valuable articles, they should have anticipated
that a theft might occur if the trailer was left unattended overnight on a
public road. They were entrusted with virtually all the household belongings of
the plaintiffs and were required to take the steps necessary to ensure the
security of their storage. It would not have been unreasonable to expect
surveillance of the trailer for so long as it was parked on the street. In that
this was a commercial area which would be quiet at night, some type of
monitoring in addition to street lamps was called for.

[83] I find as fact that the trailer in which the plaintiffs' goods were stored
was locked and its landing gear was put down, and that the trailer was detached
from the truck. However, I also find that it was intended that the storage be on
the Kennedy parking lot. Greg Coffen moved the trailer to the street on February
10, 1999 to enable snowploughing to be done. I find, and it is undisputed, that
at no time were the plaintiffs advised that their goods would be stored in a
trailer parked unattended on a public street, nor did they consent to such an
arrangement.

[84] The plaintiffs also did not consent to having their goods stored with those
of another family. The plaintiffs claim that made the trailer more attractive
for theft and is also a ground for breach of the contract with the defendant. I
do not consider it unreasonable that the company would attempt to fill up its
truck while it was being tied up with storage. So long as it could segregate the
articles, it was acting reasonably in doing so. Furthermore, there was no
evidence led at trial to support the plaintiffs' contention that having the
belongings of two families on the trailer, made the trailer more attractive and
subject to being stolen.

E. Conclusions

[85] The plaintiffs claim breach of contract and seek damages to compensate for
the value of the goods which they estimate at a replacement cost of $600,000 to
$700,000. At the beginning of the trial, counsel advised that the parties agreed
to have the matter of damages referred to the Master if I found that there was
liability on the part of the defendant. Accordingly, I do not comment upon
whether the appropriate damages would be for replacement cost or actual cash
value of the articles. That question, along with the necessary proof of damages,
will be determined on the reference.

[86] Gayle Akler, who made all the arrangements with Kennedy and entered into
the contractual relationship, admits that she was aware of the limitation of
liability clause contained in the bill of lading document which she signed. In
fact, she was aware of this type of exemption clause from the earlier move in
1994 and from the conversation she had with Mr. Peterson prior to the move in
which they discussed getting additional insurance coverage.

[87] Ms. Akler and Mr. Solway entered into this transaction knowing about the
limitation of liability clause and took steps to obtain insurance coverage for
the difference with their own insurer.

[88] Generally, liability would be determined under the bill of lading and
governing legislation and the person whose goods were being moved would be
responsible for the difference. It is the consignor who knows the value of those
goods, knows how much insurance coverage is necessary and is in the best
position to protect itself.

[89] In this case, the plaintiffs elected to obtain their own insurance for the
difference in the value of the goods and what they would be owed under the
limitation of liability clause. Their insurance adjuster estimated a value of
$170,200. The plaintiffs say they relied on this broker. The defendant takes the
position that it is that the plaintiffs' failure to insure their belongings
accurately which led to the financial loss and the mechanism for protection
failed. Kennedy submits that it should not be the defendant who bears the loss
where it was the fault of the plaintiff and/or its insurer for undervaluing the
goods.

[90] The central question in this case is whether the plaintiffs must bear the
loss because of a limitation of liability clause in the contract or whether that
clause does not apply and the defendant is responsible.

[91] There is no question and the defence admits that the plaintiffs' loss as a
result of the theft was significant. Although it has not paid what it says it
owes under the limitation of liability clause, the defence admits that it owes
approximately $7,000 to the plaintiffs.

[92] The contract between the parties was for carriage and storage of goods.
That contract was partly written and partly oral consisting of the proposal, the
oral arrangements and the bill of lading. Under the terms of the contract,
failure to deliver the goods is a breach and the defendant is liable.

[93] The issue is whether such liability is limited to 60 cents per pound under
the clause contained in the bill of lading or whether the defence is precluded
from relying on that clause. Under the legislative framework, the carrier is
liable but the limitation of liability is at 60 cents per pound: see Regulation
1088, Truck Transportation Act, R.S.O. 1990, c. T.22, s. 3. In Cornwall Gravel
Co. Ltd. v. Purolator Courier Ltd. (1978), 18 O.R. (2d) 551, 83 D.L.R. (3d) 267
(H.C.J.) which involved different legislation, the court held that the
conditions set out in the schedule of the Act were deemed to be part of the
contract between the parties. In this case, the defence asserts that the
obligations of Kennedy are prescribed by the legislation, and the conditions
concerning limited liability are deemed to apply as they are authorized by the
legislation and cannot be said to be unconscionable.

[94] Furthermore, where the terms of the exclusion clause are required to be
included by legislation, the principle of contra proferentem does not apply to
an interpretation of the clause: Madill v. Chu, [1977] 2 S.C.R. 400, 71 D.L.R.
(3d) 295.

[95] This question can only be resolved by determining the terms of the contract
with respect to security. As discussed above, while the only reference to
storage in the defendant's literature is with respect to storage in the Kennedy
warehouse, information on that service does not apply to this contract. I am
satisfied on a balance of probabilities that the parties agreed that the
plaintiffs' goods would be placed in a trailer for the two-week period. I find
that trailer storage was a term of the contract.

[96] As to the type of security, even on the defence evidence, it is agreed that
Kennedy was to provide safekeeping of the plaintiffs' belongings by parking the
trailer in the parking lot, removing the landing gear and locking the trailer.
The plaintiffs relied upon that term of the agreement when it entered into the
contract with the defendant.

[97] The trailer storage facilities of Kennedy involved parking the trailer in
its yard with the landing gear down, the air brakes locked and the trailer
locked. There were no fences, no cameras and no monitoring.

[98] It was always intended, and the plaintiffs never were told otherwise, that
their belongings would be stored on a trailer parked on the Kennedy premises.
When they moved the trailer to the street, Kennedy did not provide any
surveillance. The area was quiet and deserted at night. The trailer could have
been watched, or at least, moved back to the parking lot as soon as the
ploughing was complete rather than left overnight on the street. Steps could
have been taken to exercise care in protecting the property that was in their
possession.

[99] In cases where loss results because of the acts of a third party, the issue
is which party should bear the loss? The plaintiffs argue that they entered the
contract with Kennedy because they were assured of security of their belongings.

[100] In my view, it is the defendants who should bear those losses which were
attributable to the breach of the contract between the parties. They cannot rely
on a limitation of liability clause where it would be unreasonable to enforce it
in the circumstances.

[101] As to the claim for loss of income, the evidence was that the plaintiffs
were in turmoil for several months attempting to itemize their losses and
purchasing necessities in order to live.

[102] Each individual plaintiff is the principal and sole director and driving
force of a company. It is not surprising that each company would be affected by
the work efforts made by their principals. However, there may have been other
factors affecting production including responsibility for the house purchase and
sale, the packing and moving, child rearing of a very young child, the economy
and so on. It cannot be said that the theft of their belongings was the only
contributing factor resulting in a decline in income for the relevant fiscal
year. Nonetheless, the theft caused Ms. Akler to expend a significant effort in
detailing losses and replacing goods. It was a major factor affecting her
ability to work for a few months. Mr. Solway was also affected by the theft in
terms of his productivity.

[103] I find that given the trend in the financial statements of Sparkplug from
its inception in 1995 to 2001, and isolating the fiscal year of 1998-1999 when
the theft occurred, there was a decline in income for Sparkplug of approximately
$60,000.

[104] As to the losses experienced by Pen Station, it is admitted that Ms. Akler
and Mr. Solway discussed the issue and decided Ms. Akler would concentrate upon
dealing with the insurance adjuster and replacing items and Mr. Solway would
concentrate on his work. However, Pen Station was also affected by the
circumstances of the theft, particularly because the business was conducted in
the family home. The evidence of projects available to Mr. Solway during the
1999 year which he had to turn down total approximately $34,850. There may well
have been factors in addition to the theft which interfered with his ability to
assume those responsibilities.

[105] However, there is a significant problem created by the fact that the
claims for loss of income were made by the two corporations rather than the
individuals. No amendment of pleadings was sought at trial. The defence submits
that the corporations did not have a contractual relationship with the
defendant. They were not parties to the contract and their losses were not
contemplated by the parties at the time the contract was made. The only evidence
that Kennedy was aware of the existence of the two companies is that the
defendants' representative Greg Peterson surveyed the house prior to the move
and noted furniture including what was in the offices in the home. I am not able
to conclude on a balance of probabilities that Kennedy knew it was entering into
a contract with the two companies or that it was foreseeable that losses to the
company might occur as a result of a breach of that contract.

[106] The doctrine of privity of contract dates back to Tweddle v. Atkinson
(1861), 1 B & S 393, 30 L.J.Q.B. 265 and received its approval by the House of
Lords in Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd., [1915] A.C.
847, [1914-15] All E.R. Rep. 333. In that decision, Lord Haldane L.C. stated at
p. 853 A.C., "in the law of England certain principles are fundamental. One is
that only a person who is a party to a contract can sue on it."

[107] In London Drugs Ltd. v. Kuehne & Nagel International Ltd., [1992] 3 S.C.R.
299, 97 D.L.R. (4th) 261, Iacobucci J. wrote [at p. 416 S.C.R.]: "On the one
hand, it precludes parties to a contract from imposing liabilities or
obligations on third parties. On the other, it prevents third parties from
obtaining rights or benefits under a contract; it refuses to recognize a jus
quaesitum tertio or a jus tertii. This latter aspect has not only applied to
deny complete strangers from enforcing contractual provisions but has also
applied in cases where the contract attempts, either expressly or impliedly, to
confer benefits on a third party. In other words, it has equally applied in
cases involving third party beneficiaries."

[108] The four justifications for the doctrine of privity are generally
described as follows: (1) a contract is a personal affair, affecting only the
parties to it; (2) it would be unjust to allow a person to sue on a contract on
which he or she could not be sued; (3) if third parties could enforce a contract
made for their benefit, the rights of contracting parties to rescind or vary
such contracts would be unduly hampered; and (4) the third party is often merely
a donee and a "system of law which does not give a gratuitous promisee a right
to enforce the promise is not likely to give this right to a gratuitous
beneficiary who is not even a promisee": Treitel, The Law of Contract, 8th ed.
(London: Stevens & Sons, 1991) at pp. 527-28.

[109] It is also to be remembered that a corporation is a distinct, legal
person, separate in law from its directors and shareholders. In law, it has its
own, distinct personality: Salomon v. Salomon & Co., [1897] A.C. 22, [1895-9]
All E.R. 33 (H.L.). The corporate plaintiffs in the case at bar have a distinct,
legal identity from the two individual director/ shareholder plaintiffs.

[110] Further, there is no evidence to indicate that the personal plaintiffs
were acting as agents of the corporate plaintiffs; there is no evidence to
indicate that the personal plaintiffs made any representations to the defendant
movers that the corporate plaintiffs were represented by the plaintiffs.

[111] Accordingly, it is my view that the corporate plaintiffs cannot sue for
damages arising from the defendant's breach of contract because:

(1) the corporate plaintiffs were not privy to the contract -- they were
strangers to the contract;

(2) agency principles are not applicable;

(3) consideration did not flow between the corporate plaintiffs and the
defendant such that they could sue on the breach of a promise; and

(4) it was not a term, express or implied, that the corporate plaintiffs were
third party beneficiaries under the contract.

[112] A further question is whether the plaintiffs are able to assert or claim
in negligence for economic loss. For such a claim to succeed it must be
established that there is a relationship of sufficient proximity: Central Trust
Co. v. Rafuse, [1986] 2 S.C.R. 147, 31 D.L.R. (4th) 481. The corporate
plaintiffs are seeking damages of economic loss arising from reliance on the
negligent performance of a service for the personal plaintiff's benefit. On the
facts of this case, the requirement of proximity is not met.

[113] In my view, there was no duty of care owed to the corporate plaintiffs by
the defendant. The facts do not indicate that a sufficient relationship of
proximity or neighbourhood existed between the corporate plaintiffs and the
defendant, such that, in the reasonable contemplation of the defendant, its
carelessness may likely have injured the corporate plaintiffs which could give
rise to a claim for damages for economic loss. Kennedy had no knowledge of the
existence of the corporate plaintiffs and that it was moving their property at
the same time it was moving that of the individual plaintiffs. The defendant
could not reasonably have known of the existence of a class of persons whose
interests depended upon the safe transport of the property. There was,
therefore, no actual or constructive knowledge that the rights of the corporate
plaintiffs would in any way be affected by the move.

[114] The defence put forward an alternative argument that, while the companies
may not be entitled to loss of profits, they may be entitled to a more modest
amount. An action made per quod servitium amisit is made out where someone
injures an employee of a corporation and the corporation may claim in certain
circumstances some compensation to replace the services of the injured person.

[115] An action per quod servitium amisit does not permit the corporate
plaintiffs to recover loss of profits. The result is more modest compensation.
An amount for the cost of replacement services of Sparkplug, in my view, would
be two months of income at an average monthly income of $4,000. For Pen Station,
two weeks of work at a monthly income of $5,000 would be justifiable. The
amounts proposed by the defence were along these lines and I consider them
appropriate in the circumstances.

[116] As to the plaintiffs' claim for aggravated and punitive damages, the law
is clear that aggravated damages are awarded to compensate for intangible
injuries in addition to normally assessed damages, and punitive damages are
awarded in those rare cases to punish extreme conduct worthy of condemnation:
see Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085, 58
D.L.R. (4th) 193.

[117] I find that the claim for aggravated damages is not made out and that the
conduct of the defendant cannot be said to be deserving of punishment because of
its shockingly harsh, vindictive, reprehensible or malicious nature. The claim
for damages on these heads is not proven on a balance of probabilities.

F. Result

[118] For the reasons outlined above, it is unreasonable to enforce the
limitation of liability clause in the contract between the parties. There being
a breach of contract, the plaintiffs Solway and Akler are entitled to damages
for the loss of their home contents. The matter is referred to the Master to
determine the value of the goods claimed. The subrogated claim of the insurer is
allowed for moneys paid out under the policy to the plaintiffs. The claim for
loss of income by Sparkplug and Pen Station is dismissed. However, they are
entitled to recover a reasonable sum as compensation to replace the services of
the two individual plaintiffs respectively in the amounts of $8,000 for
Sparkplug and $2,500 for Pen Station.

[119] The claim for aggravated and punitive damages is dismissed. The plaintiffs
are entitled to interest from the date the action was commenced in accordance
with the Courts of Justice Act, R.S.O. 1990, c. C.43.

[120] If the parties are unable to agree on costs, they may contact my office to
arrange for submissions to be made at a later date.

Action allowed in part.

Bob Aaron is a Toronto real estate lawyer. He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.Visit the Toronto Star column archives at http://www.aaron.ca/columns for articles on this and other topics or his main webpage at www.aaron.ca.